Sipchem's shipping costs up 18% amid Red Sea disruptions: CEO

Abdullah Al-Saadoun, CEO of Sahara International Petrochemical Co. (Sipchem) 

Abdullah Al-Saadoun, CEO of Sahara International Petrochemical Co. (Sipchem), said about 35% of the company's products are transported via the Red Sea route and have been affected by recent disruptions.

This has led to an increase in shipping costs by 15-18%, and shipments are diverting to the Cape of Good Hope route, he noted.

Al-Saadoun added that tensions in the Red Sea created challenges in exporting products from Asian producers to Europe. However, they also paved the way for Sipchem to increase its sales in Europe.

The company owns huge stocks in several European countries like Italy, Spain, the Netherlands, Belgium and Germany, and its proximity to these markets helped it overcome the challenges resulting from the Red Sea disruptions. Moreover, the improvement of conditions in Bab Al-Mandab helped it boost exports to the European market, according to the CEO.

Regarding the company’s financial results, Al-Saadoun told Al Arabiya Business that the profit decline was due to a decrease in product prices and sales volumes, explaining that product prices fell by more than 30% year-on-year (YoY).

"Market prices have bottomed out in Q3 2023," said the CEO, expressing his optimism about the rebound in product prices over the coming period, as they rose 5-6% quarter-on-quarter (QoQ) in Q4 2023, and 5% in Q1 2024 in most of the company's product prices.

Al-Saadoun confirmed that, in light of the impact of rising feedstock prices, Sipchem has taken great steps over the past two and a half years to strengthen its competitiveness through its growth strategy and focus on digital transformation and human capital.

He also pointed to the great resilience that the company enjoys in transforming products and adapting them to market prices.