Chemanol Chairman says market will improve gradually in H2 2023

 Ali Al-Turki, Chairman of Methanol Chemicals Co. (Chemanol)

Methanol Chemicals Co. (Chemanol) incurred losses in Q4 2022, mainly due to the significant decline in prices as well as higher shipping and raw material costs, Chairman Ali Al-Turki told Argaam in a phone call.  

He added that all companies in the sector were greatly affected by these factors in the fourth quarter, indicating that 2022 sales exceeded 2021 levels in terms of total value and volumes, given the policy the company pursues to maintain its market share.   

Average product prices fell by 32% year-on-year (YoY) as some products, such as dimethylformamide (DMF) dropped by more than 70%. This was due to an increase in inventory and oversupply, as well as weak demand and economic concerns related to stagnation and inflation. This is besides the effect of the US dollar rise against other currencies in some global markets, Russia-Ukraine war and lockdowns in China.   

Al-Turki added that shipping rates hit record highs, exceeding a 10-year average, noting that shipping rates for Chemanol products grew by 51% compared to 2021, due to the immense pressure on supply chains.   

Shipping rates are expected to decline by 30% this year compared to 2022, which is already taking place.   

As for his expectations about the company's performance this year, Al-Turki said demand and product prices would improve, while shipping and raw materials costs would decline as competition in major markets such as India will likely intensify due to the weakness of peers in Asia and Africa during H1 2023.   

The Chairman added that 2023 will be tough for the sector, particularly the first half, expecting a gradual improvement in the market during H2 2023 and opening new global markets this year.   

Touching on the company's plans and projects in 2023, Al-Turki said the chemical producer is currently carrying out periodic maintenance operations to improve the efficiency of some production lines. It also has plans to implement some internal projects to produce new materials, such as concrete additives.    

Chemanol also seeks to expand in specialty products, which is expected to be completed within three years.   

The firm's policy focuses on specializing in the specialty chemicals sector; hence it cooperates with several companies to achieve this competitive advantage.   

Chemanol established a joint venture for petrochemicals, in partnership with the Global Company for Downstream Industries (GDI), the Chairman said, adding that the company is preparing the engineering designs for the first phase of its upcoming project.