Advanced’s Q3 earnings good despite higher feedstock prices: chairman

Advanced Petrochemical Co.’s Q3 results came in-line with projections, and results were good despite higher feedstock prices, chairman Khalifa Bin Abdullatif Bin Abdullah Al-Mulhem told CNBC Arabia.

Al-Mulhem said he hopes product prices will keep up with feedstock prices in the future, in order to reduce the current price gap. Feedstock prices could further increase over the remaining months of this year, he added.

The petrochemical company is trying to get the best prices for its products, he noted, pointing out that there has been pressure on prices due to Turkey’s economic problems, in addition to the trade war between the United States and China.

According to a report on Sunday by Riyad Capital, escalating US-China trade tensions and the subsequent depreciation of the Chinese yuan weighed heavily against the industry’s market dynamics in Q3. As a result of the trade war, several regional and Chinese traders started to offload US-origin polymers (PP, PE) at lower prices to downstream export-oriented processors in Southeast Asia, leading to downward pressure on prices.

Looking ahead, Advanced intends to enter markets in Africa and South America, as they offer better prices than the company’s current biggest markets – Turkey and China – which would improve margins, Al-Mulhem said.

Advanced reported a 3 percent year-on-year decline in net profit to SAR 202.2 million in Q3 2018.