عربي English Türkçe اردو فارسى
Logo
Latest News
Business

Financial Results of Petrochemicals, Cement Drop in Saudi Arabia

A petrochemical plant in Saudi Arabia (Asharq Al-Awsat)
A petrochemical plant in Saudi Arabia (Asharq Al-Awsat)
TT
TT

Financial Results of Petrochemicals, Cement Drop in Saudi Arabia

A petrochemical plant in Saudi Arabia (Asharq Al-Awsat)
A petrochemical plant in Saudi Arabia (Asharq Al-Awsat)

Saudi Arabia's financial results of listed petrochemical and cement companies have experienced a decline in the first half of 2023. Economic analysts attribute this downturn to three key factors, namely the unprecedented rapid increase in interest rates and the mounting pressure on the markets.

- Profits decline

Several institutions are closely monitoring the financial results of the Saudi financial market, and they foresee a downturn for most companies operating in the petrochemical and cement sectors in the first half of this year.

Some experts predict that certain petrochemical companies may experience a substantial increase, with growth rates potentially reaching as high as 95 percent compared to the previous year (2022).

The average forecast for cement decline was in the thirties and twenties percentile.

- International prices

Economic analyst Abdullah al-Jabali has identified three primary factors responsible for the decline in the financial performance of petrochemical companies.

In statements to Asharq Al-Awsat, he said these factors include the decrease in global prices of petrochemical products, reduced quantities of products sold, and lower petrochemical sales.

Additionally, he highlighted the impact of rising debt costs due to the high-interest rate environment, with the US Federal Reserve implementing an unprecedented and accelerated series of interest rate hikes.

Al-Jabali emphasized that the combined effect of these factors had a significant impact on companies operating in the petrochemical sector. The entire economic cycle of petrochemical companies, along with their suppliers, manufacturers, and consumers, felt the repercussions, ultimately leading to the decline in these companies' financial results.

- Interest effect

Jabali pointed out that the factors affecting the financial results of the cement sector are similar to those concerning petrochemicals.

The high-interest rates and debt costs are pressuring the real estate market in Saudi Arabia, which caused a decline in the real estate movement, said the expert.

- Movement decline

Jabali believes these factors misled the real estate market and led to a drop in the movement of building materials, contracting, and cement factories, as evidenced by the decrease in the number of beneficiaries of housing support provided to individuals to about 50 percent compared to last year.

He noted that interest rates' impact on the sales volume of cement products was not limited to Saudi Arabia but included all international markets.

The economist dismissed the idea of exporting cement products to increase sales, noting that the country has a problem in the real estate market.

He believes Saudi Arabia is at the end of the crisis, and the current stock prices of petrochemical and cement companies can be considered for long-term investments.

Jabali called on the joint-stock companies to take all solutions that curb the decline in stock prices and fall in financial results, including reducing costs and settling loans.

- Economic cycle

For his part, the CEO of Villa Financial Company, Hamad al-Olayan, said that petrochemicals are going through an economic cycle linked to the movements of feedstock prices and the different prices of products operating in the sector.

He told Asharq Al-Awsat that the recent drop in freight and feedstock prices and the US Federal Reserve the rise in interest rates would increase the profit margins of many petrochemical companies.

Olayan expected that the performance of most petrochemical companies will improve in the second quarter and that the sector will be one of the most important sectors in the financial market, specifically in the fourth quarter and the beginning of 2024.

He emphasized that the petrochemical sector will attract numerous large-scale investors and investment portfolios, local or foreign, due to the current economic cycle.

Regarding the decline in the financial results of cement companies, Olayan acknowledged the sector's significance in building and construction, including its involvement in government projects.

Cement is still suitable for investors, and most of them aim for recurring revenues, given the sector's history and its role in granting recurring payments, he said, adding that it remains a profitable sector, even with declining product prices.

Farah MJ Saab

Most Viewed

 
 
Business

IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
TT
TT

IMF and Arab Monetary Fund Sign MoU to Enhance Cooperation

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA
The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki - SPA

The International Monetary Fund (IMF) and the Arab Monetary Fund (AMF) signed a memorandum of understanding (MoU) on the sidelines of the AlUla Conference on Emerging Market Economies (EME) to enhance cooperation between the two institutions.

The MoU was signed by IMF Managing Director Dr. Kristalina Georgieva and AMF Director General Dr. Fahad Alturki, SPA reported.

The agreement aims to strengthen coordination in economic and financial policy areas, including surveillance and lending activities, data and analytical exchange, capacity building, and the provision of technical assistance, in support of regional financial and economic stability.

Both sides affirmed that the MoU represents an important step toward deepening their strategic partnership and strengthening the regional financial safety net, serving member countries and enhancing their ability to address economic challenges.

Business

Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT
TT
TT

Saudi Chambers Federation Announces First Saudi-Kuwaiti Business Council

File photo of the Saudi flag/AAWSAT
File photo of the Saudi flag/AAWSAT

The Federation of Saudi Chambers announced the formation of the first joint Saudi-Kuwaiti Business Council for its inaugural term (1447–1451 AH) and the election of Salman bin Hassan Al-Oqayel as its chairman.

Al-Oqayel said the council’s formation marks a pivotal milestone in economic relations between Saudi Arabia and Kuwait, reflecting a practical approach to enabling the business sectors in both countries to capitalize on promising investment opportunities and strengthen bilateral trade and investment partnerships, SPA reported.

He noted that trade between Saudi Arabia and Kuwait reached approximately SAR9.5 billion by the end of November 2025, including SAR8 billion in Saudi exports and SAR1.5 billion in Kuwaiti imports.

Business

Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
TT
TT

Leading Harvard Trade Economist Says Saudi Arabia Holds Key to Success in Fragmented Global Economy

Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).
Professor Pol Antràs speaks during a panel discussion at the AlUla Conference for Emerging Market Economies (Asharq Al-Awsat).

Harvard University economics professor Pol Antràs said Saudi Arabia represents an exceptional model in the shifting global trade landscape, differing fundamentally from traditional emerging-market frameworks. He also stressed that globalization has not ended but has instead re-formed into what he describes as fragmented integration.

Speaking to Asharq Al-Awsat on the sidelines of the AlUla Conference for Emerging Market Economies, Antràs said Saudi Arabia’s Vision-driven structural reforms position the Kingdom to benefit from the ongoing phase of fragmented integration, adding that the country’s strategic focus on logistics transformation and artificial intelligence constitutes a key engine for sustainable growth that extends beyond the volatility of global crises.

Antràs, the Robert G. Ory Professor of Economics at Harvard University, is one of the leading contemporary theorists of international trade. His research, which reshaped understanding of global value chains, focuses on how firms organize cross-border production and how regulation and technological change influence global trade flows and corporate decision-making.

He said conventional classifications of economies often obscure important structural differences, noting that the term emerging markets groups together countries with widely divergent industrial bases. Economies that depend heavily on manufacturing exports rely critically on market access and trade integration and therefore face stronger competitive pressures from Chinese exports that are increasingly shifting toward alternative markets.

Saudi Arabia, by contrast, exports extensively while facing limited direct competition from China in its primary export commodity, a situation that creates a strategic opportunity. The current environment allows the Kingdom to obtain imports from China at lower cost and access a broader range of goods that previously flowed largely toward the United States market.

Addressing how emerging economies should respond to dumping pressures and rising competition, Antràs said countries should minimize protectionist tendencies and instead position themselves as committed participants in the multilateral trading system, allowing foreign producers to access domestic markets while encouraging domestic firms to expand internationally.

He noted that although Chinese dumping presents concerns for countries with manufacturing sectors that compete directly with Chinese production, the risk is lower for Saudi Arabia because it does not maintain a large manufacturing base that overlaps directly with Chinese exports. Lower-cost imports could benefit Saudi consumers, while targeted policy tools such as credit programs, subsidies, and support for firms seeking to redesign and upgrade business models represent more effective responses than broad protectionist measures.

Globalization has not ended

Antràs said globalization continues but through more complex structures, with trade agreements increasingly negotiated through diverse arrangements rather than relying primarily on multilateral negotiations. Trade deals will continue to be concluded, but they are likely to become more complex, with uncertainty remaining a defining feature of the global trading environment.

Interest rates and artificial intelligence

According to Antràs, high global interest rates, combined with the additional risk premiums faced by emerging markets, are constraining investment, particularly in sectors that require export financing, capital expenditure, and continuous quality upgrading.

However, he noted that elevated interest rates partly reflect expectations of stronger long-term growth driven by artificial intelligence and broader technological transformation.

He also said if those growth expectations materialize, productivity gains could enable small and medium-sized enterprises to forecast demand more accurately and identify previously untapped markets, partially offsetting the negative effects of higher borrowing costs.

Employment concerns and the role of government

The Harvard professor warned that labor markets face a dual challenge stemming from intensified Chinese export competition and accelerating job automation driven by artificial intelligence, developments that could lead to significant disruptions, particularly among younger workers. He said governments must adopt proactive strategies requiring substantial fiscal resources to mitigate near-term labor-market shocks.

According to Antràs, productivity growth remains the central condition for success: if new technologies deliver the anticipated productivity gains, governments will gain the fiscal space needed to compensate affected groups and retrain the workforce, achieving a balance between addressing short-term disruptions and investing in long-term strategic gains.