BCI forecasts lower demand to continue in 2024, working to upgrade product quality: CEO

Ala AlShaikh, CEO of Basic Chemical Industries

Basic Chemical Industries Co. (BCI) is working to upgrade the quality of products sold during the year to mitigate the sector’s weak growth and focus on high-value products, the CEO Ala AlShaikh told Argaam. 

He stated that the company is working to upgrade the quality of products sold during the year to mitigate the sector’s weak growth and focus on high-value products.

There is a slight improvement in prices and demand during H2 2023, compared to H1 2023, specifically in Q4 2023, the CEO said. 

AlShaikh explained that the Jubail factory’s sales of chlorine, caustic soda, hydrochloric acid, and sodium hypochlorite represent 17% of the company’s total sales for 2023. 

BCI’s investments in specialty chemicals in Henkel Adhesives and Huntsman Polyurethanes account for 60% of total sales, while the remaining 23% comprises sulfuric acid sales from the company's factory in Yanbu Industrial City and the group's other industrial activities. 

Speaking on obtaining an industrial loan to finance the company’s project in Jubail Industrial City, AlShaikh said that the loan replaced the current commercial loan, indicating that the entire loan will be utilized to repay approximately 90% of the commercial loan, while the remainder will be rescheduled to be completed by the end of Q2 2025. 

The company will be able to reduce the cost of debt in its financial statements to less than half through the industrial loan, as it will be repaid as of October 2025 after the grace period expires. 

The CEO indicated that the prevailing interest rates are currently high, which will reflect positively on profitability and cashflows.  

A positive impact is projected to appear on Q1 2024 financials, he stated. 

AlShaikh said the company’s sole outstanding loan stands at SAR 393 million. 

According to data compiled by Argaam, BCI’s subsidiary, Chemical Marketing and Distribution Co. Ltd., secured a loan from the Saudi Industrial Development Fund (SIDF), on Dec. 17, to finance its project in Jubail Industrial City.  The SAR 376 million loan has a duration of seven years and three months starting from Oct. 8, 2025.