Falih: ‘We are Falling Behind, We Need to Keep Pace with the World in Chemical Sector’

Saudi Energy Minister Khalid al-Falih. Reuters
Saudi Energy Minister Khalid al-Falih. Reuters
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Falih: ‘We are Falling Behind, We Need to Keep Pace with the World in Chemical Sector’

Saudi Energy Minister Khalid al-Falih. Reuters
Saudi Energy Minister Khalid al-Falih. Reuters

Saudi Arabia’s Energy Minister Khalid al-Falih said that the Gulf region can claim only two percent of the world’s $4 trillion a year in chemicals revenue, including all the branches of downstream value addition despite its commodity leadership position in oil and gas leadership and production.

He said that this is largely due to the Gulf’s limited position in higher and value-added products.

“For example, our region’s share of global specialties revenues is barely one percent compared to 25 percent for Western Europe, and we account for only three percent of worldwide value addition from chemicals, compared to the 25 percent of value addition that comes from the United States,” Falih said.

The region locally consumes only about 18 percent of petrochemicals for conversion into higher value products while more than 80 percent are exported.

In return, the United States exports only one-third of its petrochemical production as basic commodities while the two-thirds are usually converted into higher value products, Falih explained.

“I urge our regional industry to match the US conversion rates by the year 2030. Likewise, the US and European chemical industries each employ between five and six million worker, directly and indirectly, compared to only about half a million here in the entire GCC.”

We are also falling behind our global competitors in terms of operational excellence since our region’s operating costs exceed US levels by between 15 and 20 percent and China's levels by double these percentages, Falih noted.

As a result, the profitability of the sector and its macroeconomic benefits have declined significantly. The competitive cost structure depends largely on the cost advantages of the feedstock rather than on the cost of production, Falih said, stressing the need for concerted efforts by the government, industry, investors and innovators to bridge these gaps.

“In other words, if we are to take a leadership position that corresponds to the immense potential of our region, the future-oriented progressive government policies must be supported by sound institutional strategies as well as an environment that fosters entrepreneurship, venture capital, research and development,” he said while delivering the inaugural address at the 12th Annual Gulf Petrochemicals and Chemicals Association (GPCA) Forum in Dubai.



Gold Gains on Safe-haven Demand as Trump Expands Trade War

FILE PHOTO: An employee places ingots of 99.99 percent pure gold in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: An employee places ingots of 99.99 percent pure gold in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. REUTERS/Alexander Manzyuk/File Photo
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Gold Gains on Safe-haven Demand as Trump Expands Trade War

FILE PHOTO: An employee places ingots of 99.99 percent pure gold in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. REUTERS/Alexander Manzyuk/File Photo
FILE PHOTO: An employee places ingots of 99.99 percent pure gold in a workroom at the Novosibirsk precious metals refining and manufacturing plant in the Siberian city of Novosibirsk, Russia, September 15, 2023. REUTERS/Alexander Manzyuk/File Photo

Gold prices rose for a third straight session on Friday, as US President Donald Trump's announcement of new tariffs on Canada and broader tariff threats against other trading partners lifted demand for the safe-haven asset.
Spot gold was up 0.5% to $3,339.99 per ounce, as of 0755 GMT. US gold futures gained 0.8% to $3,351.
"We're seeing some growing demand for gold as a haven. There are investors looking for some safety asset despite stock markets hitting highs. And any dip in gold is seen as a buying opportunity now," said Carlo Alberto De Casa, an external analyst at Swissquote.
On Thursday, Trump said US would impose a 35% tariff on imports from Canada and planned to impose blanket duties of 15% or 20% on most other trade partners, Reuters said.
This follows Wednesday's announcement of a 50% tariff on US copper imports and a similar levy on goods from Brazil, along with tariff notifications sent earlier to other trading partners.
Trump also said the European Union could receive a letter on tariff rates by Friday, throwing into question the progress of trade talks between Washington and the 27-nation bloc.
"Rising trade tensions have reinvigorated demand for haven assets such as gold amid the prospect of an economic slowdown. The more dovish Fed is also boosting investor appetite," analysts at ANZ wrote in a note.
Data on Thursday showed weekly jobless claims in the US fell unexpectedly to a seven-week low, indicating stable employment levels.
Federal Reserve Governor Christopher Waller on Thursday reiterated his belief the central bank could cut interest rates at its policy meeting later this month.
Meanwhile, Fed Bank of San Francisco President Mary Daly said two rate cuts remain on the table for this year.
Lower rates boost non-yielding gold's appeal.
Elsewhere, spot silver rose 0.9% to $37.37 per ounce, platinum fell 1% to $1,346.81 and palladium climbed 1.3% to $1,156.44.