Sipchem Q4 2018 hurt by price decline, halt of methanol plant: CEO

Saudi International Petrochemical Co.’s (Sipchem) Q4 2018 financial results were impacted by a 15 percent to 30 percent quarter-on-quarter decline in selling prices, CEO Ahmad Alohali told Al Arabiya channel.

The scheduled maintenance of the methanol plant in Q4 has impacted the firm’s financial results for the quarter, he said, adding that the plant was shut down for an extra week after the scheduled 6-week halt for technical reasons.

Commenting on Sipchem’s results for fiscal year 2018, Alohali said they were ‘good’ and the factories’ performance was improved.

As for the variance between analysist estimates and the company’s results, he said that research firms depend on price data attained from the consumer or the product, while discounts and price alterations occur between the buyer and seller.

The price of a certain product might be $1,000, while after discount it could be $700, or it might be modified to $1,100, he explained.

When asked about oil price effect on petrochemicals, Alohali said that the impact of demand on petrochemicals in Q1 2019 is above the impact of oil prices, pointing out that demand was hit by the production halt in China for the Chinese new year earlier this month.

Alohali expected H1 2019 to be similar to H2 2018, when demand was lower than the previous half, due to the start of operations at several US factories, and oil price volatility, which will curb buyers’ desire to sign long-term contracts.  

Sipchem is optimistic and sees change in petrochemicals this week, he said, adding: “We hope Q2 2019 would be good.”

According to data compiled by Argaam, Sipchem net profit for fiscal year 2018 rose 33 percent YoY to SAR 583 million. Meanwhile, Q4 net profit plunged 76 percent YoY to SAR 40 million.