Tasnee CEO says petchem sector witnesses economic cycles, expects margins to improve in H2 2024

Mutlaq Al-Morished, CEO of National Industrialization Co. (Tasnee)

The petrochemicals market has witnessed worse cycles in the past, Mutlaq Al-Morished, CEO of National Industrialization Co. (Tasnee), said, adding that the sector goes through various economic cycles. 

Speaking to Argaam on the sidelines of the GPCA Forum in Doha, Qatar, Al-Morished noted that while there is demand in the market, it is not as strong as expected. 

Prices are weighed down by the less-than-expected Chinese economic recovery, in addition to geopolitical tensions in the Middle East, Europe and other regions. 

He added that regional tensions, the war in Ukraine and high propylene production from China pressured supply. 

The cost of production in China is higher than the cost of importing. Thus, China continues to import from low-cost producing regions for many years, as it cannot implement a self-sufficiency policy. 

He pointed out that the feedstock prices did not change, while the prices of propane and butane gas rose, which affected many producers due to the dependence on propane and Japan’s pricing. 

He indicated that propane and butane pricing should be linked to a producer like the United States, and not Japan because it is not a producer. 

Tasnee submitted a request to the Ministry of Energy to obtain feedstock to expand the polyethylene production project in Jubail, which costs $650 million. The engineering work is complete and the project is now in the procurement and construction phase, he stated. 

He affirmed that Tasnee seeks to boost production capacity at the Ilmenite Smelter project, as technical problems have been solved. The factory is operating at a production capacity of up to 55%. It relies on the latest technology and experience, he added. 

Al-Morished pointed out that work is underway to build the second furnace, as Tasnee embarked on engineering work, after which procurement and construction will start. 

Tasnee will continue to work with Metso Outotec to pay part of the construction costs. 

The current year was difficult in terms of demand levels and prices. Accordingly, the outlook for the first half of 2024 is not expected to be good, while H2 2024 is predicted to see a slight improvement, he said. 

The petrochemical producers are keen to see improvement in demand as well as selling prices.