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SABIC Profits Jump 482% in H1 2021

Saudi Arabia’s petrochemicals giant, SABIC, doubles profits, taking advantage of the improvement in global demand (Asharq Al-Awsat)
Saudi Arabia’s petrochemicals giant, SABIC, doubles profits, taking advantage of the improvement in global demand (Asharq Al-Awsat)
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SABIC Profits Jump 482% in H1 2021

Saudi Arabia’s petrochemicals giant, SABIC, doubles profits, taking advantage of the improvement in global demand (Asharq Al-Awsat)
Saudi Arabia’s petrochemicals giant, SABIC, doubles profits, taking advantage of the improvement in global demand (Asharq Al-Awsat)

Petrochemicals giant Saudi Basic Industries Corp (SABIC) revealed on Thursday that it swung to a whopping SAR 12.5 billion ($3.3 billion) quarterly profit after posting a SAR 3.2 billion ($880 million) loss due to the coronavirus pandemic during the same period last year.

Figures recorded in H1 2021 reflect a 482% hike in profits, almost fivefold last numbers.

While the coronavirus pandemic continues to affect global markets, SABIC has registered a solid financial performance over the last three months.

In the three months to the end of June, the net profit jumped 57% to a 10-year high of SR7.64 billion ($2.03 billion) as revenue rose 13% to SR42.42 billion, SABIC said in a filing to the Tadawul stock exchange.

The Middle East’s largest petrochemicals producer said that the reason for achieving profits during the current period is due to the increase in average selling prices of products and the achievement of a net gain in SABIC’s share of joint ventures and associate companies.

During H1 2020, provisions for impairment in the value of some capital and financial assets amounting to SAR 2.28 billion were recorded.

“SABIC’s financial performance in the second quarter was strong – continuing the margin improvement seen during the first quarter of 2021,” Yousef Abdullah Al-Benyan, vice chairman and CEO of SABIC, told reporters.

“This was driven by higher sales volumes and prices, supported by a rise in oil prices and a healthy supply and demand balance for most of our key products as the global economy continued its path to recovery.”

Al-Benyan pointed to the company’s ability to benefit from improving external conditions, which was enhanced by implementing a large-scale transformation program and controlling the movement of capital strongly.

In 2015, SABIC launched its transformation program to develop its operating model, increase competitiveness, promote sustainability, and foster innovation. This came at a time when Saudi Aramco completed the acquisition of 70% of SABIC shares to increase efficiency.

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Will Tariffs Accelerate Free Trade Deals?

Container cargo ships docked at Bangkok port (Reuters)
Container cargo ships docked at Bangkok port (Reuters)
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Will Tariffs Accelerate Free Trade Deals?

Container cargo ships docked at Bangkok port (Reuters)
Container cargo ships docked at Bangkok port (Reuters)

More than 70 countries are waiting for their turn to sit at the negotiating table with US officials, as they scramble to avoid a wave of new tariffs imposed by President Donald Trump’s administration under a policy the White House has described as a “global trade rebalancing.”

As diplomatic and trade delegations rush to arrange urgent meetings in Washington, key questions are emerging over what options these nations have in order to avert a trade escalation — and whether they can secure exemptions from the new duties.

As some countries consider leveraging trade pressure or economic alliances in response, analysts warn that what the US administration calls a “preventive trade war” could trigger sweeping changes in the structure of global commerce.

In the Gulf region, however, analysts believe the impact of Washington’s decisions remains limited. They say Gulf states have enough flexibility to reposition themselves and mitigate the fallout from the new US measures.

Saudi economist Dr. Ihsan A. Buhulaiga says it is too early to speak of a final framework for global trade flows, arguing that Trump’s tariff decisions appear more like negotiating tactics than irreversible policy shifts.

“These moves seem more like bargaining positions than fixed policies,” A. Buhulaiga told Asharq Al-Awsat.

“Many countries and blocs, including the European Union, are watching closely before reacting in ways that might provoke President Trump — as was the case with China.”

A. Buhulaiga said Trump’s tariff hikes have eroded trust between the United States and its key trading partners — China, Mexico, Canada, and the EU.

“Trump’s approach is focused on generating revenue for the US Treasury from imports, with little regard for the broader consequences,” he said.

“That stance has already triggered sharp volatility — not just in equity markets, but also in bonds, especially US government debt.”

While the impact of US tariffs on Gulf states is expected to be limited, economists say the ongoing trade war is unlikely to accelerate free trade agreements between the Gulf Cooperation Council (GCC) and major economic blocs.

“For Gulf countries, including the region’s two largest economies — Saudi Arabia and the UAE — the effect of US tariffs is minimal,” said A. Buhulaiga.

“But pursuing free trade agreements with other blocs now would be risky, especially if that includes China, given the current tensions between Beijing and Washington,” he added.

A. Buhulaiga noted that tariff increases are primarily aimed at China, and pointed out that efforts to strike trade deals between the GCC and other economic alliances have taken decades with little progress.

“There’s no sign on the horizon that any agreements will be signed soon,” he said.

Meanwhile, Saudi global trade expert Dr. Fawaz Alamy explained that when the World Trade Organization (WTO) was founded, member states agreed to divide countries seeking accession into three developmental tiers.

He said advanced economies — including the United States, Canada, the European Union, and Japan — committed to fully adopting WTO rules without exceptions.

Developing nations such as China, Türkiye, Saudi Arabia, and most Arab and Islamic countries were allowed limited exemptions, while least-developed countries, particularly in Africa, were granted broader leniency.

“To promote globalization, WTO members agreed to open their markets, lock in tariff rates at agreed levels, and avoid technical barriers to imports,” Alamy told Asharq Al-Awsat.