Merger Talks between 2 Saudi Petrochemical Firms Resume after 10 Years

Part of the Saudi Petrochem projects that are engaged in merger talks with the Saudi Industrial Investment Group. Asharq Al-Awsat
Part of the Saudi Petrochem projects that are engaged in merger talks with the Saudi Industrial Investment Group. Asharq Al-Awsat
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Merger Talks between 2 Saudi Petrochemical Firms Resume after 10 Years

Part of the Saudi Petrochem projects that are engaged in merger talks with the Saudi Industrial Investment Group. Asharq Al-Awsat
Part of the Saudi Petrochem projects that are engaged in merger talks with the Saudi Industrial Investment Group. Asharq Al-Awsat

Talks to merge two Saudi petrochemical companies, which had been frozen for nearly 10 years, have resumed.

Saudi Industrial Investment Group (SIIG) and the National Petrochemical Company (Petrochem) announced Sunday that they have begun talks over a potential merger.

The SIIG and Petrochem boards have approved initial discussions to study the feasibility of a merger but no agreement has been reached on any final structure of a merged entity, the companies said in separate statements.

They pointed out that if a deal is reached, it will be subject to the conditions and approvals of competent authorities, as well as the extraordinary general assembly of both companies.

SIIG owns 50 percent of Petrochem, but the two firms are similar in size, suggesting a deal would be a merger of near equals.

The two companies previously held merger discussions in 2011, with the talks eventually postponed to allow Petrochem’s facility at Jubail to reach production capacity and provide better valuations of the companies, SIIG said back then.

The Riyadh-based Petrochem has paid-up capital of SAR4.8bn riyals. It owns 65 percent of the Saudi Polymer Co, which permanently closed down its polystyrene (PS) manufacturing plant at the Jubail petchems complex in July and produced petrochemical products.

Arabian Chevron Phillips Petrochemical Co., wholly owned by CPChem, owns the remainder of Saudi Polymers Co.



Gold Slips as US Bond Yields Rise, Investors Assess New Tariffs

Gold rings are displayed in a gold shop in Chinatown in Bangkok, Thailand August 21, 2018. REUTERS/Soe Zeya Tun/File Photo
Gold rings are displayed in a gold shop in Chinatown in Bangkok, Thailand August 21, 2018. REUTERS/Soe Zeya Tun/File Photo
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Gold Slips as US Bond Yields Rise, Investors Assess New Tariffs

Gold rings are displayed in a gold shop in Chinatown in Bangkok, Thailand August 21, 2018. REUTERS/Soe Zeya Tun/File Photo
Gold rings are displayed in a gold shop in Chinatown in Bangkok, Thailand August 21, 2018. REUTERS/Soe Zeya Tun/File Photo

Gold prices eased on Tuesday, weighed by higher US Treasury yields as US President Donald Trump announced new tariff proposals on trading partners, including Japan and South Korea.

Spot gold was down 0.2% at $3,328.67 per ounce, as of 1207 GMT. US gold futures fell 0.1% to $3,338.20.

The yield on benchmark US 10-year notes rose to a two-week peak, making the non-yielding bullion less attractive.

"Gold is stuck between a rock and a hard place," said UBS commodity analyst Giovanni Staunovo, Reuters reported.

"Negative for the gold price is the US decision to extend the deadline for a trade deal for many trade partners, positive for the gold price is the fact that key US trading partners in Asia might have to deal with higher tariffs in the near future, weighing on economic growth prospects."

On Monday, Trump told 14 countries that sharply higher tariffs would start on August 1, marking a new phase in the trade war he launched in April, with levies between 25% and 40%.

The new deadline was firm, Trump said, adding that he would consider extensions if countries made proposals for a trade deal.

"Reciprocal tariffs" were to be capped at 10% until July 9 to allow for negotiations, but so far, agreements have been reached only with Britain and Vietnam. In June, Washington and Beijing agreed on a framework covering tariff rates.

Meanwhile, China has warned the Trump administration against reigniting trade tensions and threatened to retaliate against nations that strike deals with the US to exclude it from their supply chains.

Trump's tariffs have stoked inflation fears, further complicating the US Federal Reserve's path to lower interest rates.

Investors await minutes of the Fed's June meeting, due on Wednesday, for more clues into the bank's policy outlook.

Spot silver fell 0.1% to $36.71 per ounce, platinum rose 0.2% to $1,372.51, and palladium rose 0.6% to $1,117.33.