Saudi Oil Companies Incur Losses in 2023 Due to Slow Global Demand, Falling Product Prices

SABIC recorded the highest loss among companies in the sector. (SABIC website)
SABIC recorded the highest loss among companies in the sector. (SABIC website)
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Saudi Oil Companies Incur Losses in 2023 Due to Slow Global Demand, Falling Product Prices

SABIC recorded the highest loss among companies in the sector. (SABIC website)
SABIC recorded the highest loss among companies in the sector. (SABIC website)

Analysts said that the large losses recorded by oil companies listed on the Saudi Stock Exchange (Tadawul) were due to the slowdown in the global economy, which caused a decline in demand for petrochemical products.
Petrochemical companies listed on Tadawul registered a combined net loss of around SAR 5.2 billion ($1.4 billion) in 2023, compared to profits that amounted to SAR 29.8 billion in 2022.
Among the 12 oil companies listed on Tadawul, five companies achieved a net profit, namely: SABIC Agri-Nutrients, Tasnee, Saudi Group, Sipchem, and Advanced, albeit with a decline compared to the previous year.
SABIC recorded the highest loss among the companies in the sector, amounting to SAR 2.77 billion, compared to profits of SAR 16.53 billion during the previous year. The company attributed these figures to non-cash losses as a result of the Public Investment Fund’s acquisition of SABIC’s entire stake in the Saudi Iron and Steel Company (Hadeed).
Saudi Kayan came in second place in terms of the highest losses, which amounted to SAR 2.14 billion in 2023, compared to SAR 1.24 billion in 2022.
The company explained that its losses were mainly due to the decrease in the average selling prices of the products, as well as in the quantities produced and sold, pointing to the shutdown of some production units to perform scheduled periodic maintenance.
On the other hand, SABIC Agri-Nutrients topped the list of companies that achieved the highest profits, despite a decline of about 64 percent compared to the previous year. The company registered net profits amounting to SAR 3.66 billion in 2023, compared to SAR 10.04 billion in 2022.
In remarks to Asharq Al-Awsat, financial markets analyst Abdullah Al-Kathiri linked the oil companies’ losses to global conditions, mainly the economic slowdown worldwide, especially in China, which caused a decline in demand for petrochemical products.
For his part, financial advisor at Arab Trader Mohammed Al-Maymouni noted that despite the sharp decline in the profitability of companies, this will provide an investment opportunity in the next two quarters in conjunction with the improvement in oil prices and their upward trend above $80.

 



US Tariffs Could Slow China's Growth to 4.5% in 2025

People walk past a billboard which reads I love Beijing, Happy New Year at 798 art district, ahead of the upcoming Lunar New Year, marking the Year of the Snake, in Beijing on January 14, 2025. (Photo by JADE GAO / AFP)
People walk past a billboard which reads I love Beijing, Happy New Year at 798 art district, ahead of the upcoming Lunar New Year, marking the Year of the Snake, in Beijing on January 14, 2025. (Photo by JADE GAO / AFP)
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US Tariffs Could Slow China's Growth to 4.5% in 2025

People walk past a billboard which reads I love Beijing, Happy New Year at 798 art district, ahead of the upcoming Lunar New Year, marking the Year of the Snake, in Beijing on January 14, 2025. (Photo by JADE GAO / AFP)
People walk past a billboard which reads I love Beijing, Happy New Year at 798 art district, ahead of the upcoming Lunar New Year, marking the Year of the Snake, in Beijing on January 14, 2025. (Photo by JADE GAO / AFP)

China's economic growth is likely to slow to 4.5% in 2025 and cool further to 4.2% in 2026, a Reuters poll showed, with policymakers poised to roll out fresh stimulus measures to soften the blow from impending US tariff hikes.

Gross domestic product (GDP) likely grew 4.9% in 2024 - largely meeting the government's annual growth target of around 5%, helped by stimulus measures and strong exports, according to the median forecasts of 64 economists polled by Reuters.

But the world's second-largest economy faces heightened trade tensions with the United States as President-elect Donald Trump, who has proposed hefty tariffs on Chinese goods, is set to return to the White House next week.

“Potential US tariff hikes are the biggest headwind for China's growth this year, and could affect exports, corporate capex and household consumption,” analysts at UBS said in a note.

“We (also) foresee property activity continuing to fall in 2025, though with a smaller drag on growth.”

Growth likely improved to 5.0% in the fourth quarter from a year earlier, quickening from the third-quarter's 4.6% pace as a flurry of support measures began to kick in, the poll showed.

On a quarterly basis, the economy is forecast to grow 1.6% in the fourth quarter, compared with 0.9% in July-September, the poll showed.

The government is due to release fourth-quarter and full-year GDP data, along with December activity data, on Friday.

China's economy has struggled for traction since a post-pandemic rebound quickly fizzled out, with a protracted property crisis, weak demand and high local government debt levels weighing heavily on activity, souring both business and consumer confidence.

Policymakers have unveiled a blitz of stimulus measures since September, including cuts in interest rates and banks' reserve requirements ratios (RRR) and a 10 trillion yuan ($1.36 trillion) municipal debt package.

They have also expanded a trade-in scheme for consumer goods such as appliances and autos, helping to revive retail sales.

Analysts expect more stimulus to be rolled out this year, but say the scope and size of China's moves may depend on how quickly and aggressively Trump implements tariffs or other punitive measures.

More stimulus on the cards

At an agenda-setting meeting in December, Chinese leaders pledged to increase the budget deficit, issue more debt and loosen monetary policy to support economic growth in 2025.

Leaders have agreed to maintain an annual growth target of around 5% for this year, backed by a record high budget deficit ratio of 4% and 3 trillion yuan in special treasury bonds, Reuters has reported, citing sources.

The government is expected to unveil growth targets and stimulus plans during the annual parliament meeting in March.

Faced with mounting economic risks and deflationary pressures, top leaders in December ditched their 14-year-old “prudent” monetary policy stance for a “moderately loose” posture.

China's central bank is expected to deploy its most aggressive monetary tactics in a decade this year as it tries to revive the economy, but in doing so it risks quickly exhausting its firepower. It has already had to repeatedly shore up its defense of the yuan currency as downward pressure pushes it to 16-month lows.

Analysts polled by Reuters expected the central bank to cut the seven-day reverse repo rate, its key policy rate, by 10 basis points in the first quarter, leading to a same cut in the one-year loan prime rate (LPR) - the benchmark lending rate.

The PBOC may also cut the weighted average reserve requirement ratio (RRR) for banks by at least 25 basis points in the first quarter, the poll showed, after two cuts in 2024.

Consumer inflation will likely pick up to 0.8% in 2025 from 0.2% in 2024, and rise further to 1.4% in 2026, the poll showed.