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Saudi Petrochemical Companies Projected to Increase Profitability Over Next Two Quarters

SABIC accounted for approximately 69% of the sector’s net profits in Q2 2024, with an 85% growth. (SABIC)
SABIC accounted for approximately 69% of the sector’s net profits in Q2 2024, with an 85% growth. (SABIC)
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Saudi Petrochemical Companies Projected to Increase Profitability Over Next Two Quarters

SABIC accounted for approximately 69% of the sector’s net profits in Q2 2024, with an 85% growth. (SABIC)
SABIC accounted for approximately 69% of the sector’s net profits in Q2 2024, with an 85% growth. (SABIC)

Economic analysts predict that Saudi Arabia’s petrochemical companies will continue to post strong profits in their financial results for the next two quarters of 2024.

They noted that the financial results from the previous two quarters demonstrated solid operational efficiency, increased sales, and the sector’s ability to adapt to changing market conditions. This positive outlook is also supported by improving market conditions and rising demand for petrochemical products.

Companies in the petrochemical sector listed on the Saudi stock exchange (Tadawul) saw a significant increase in net profits by the end of Q2 2024, with a 62% rise to SAR 3.18 billion ($800 million), compared to SAR 1.96 billion ($500 million) during the same period in 2023—an increase of SAR 1.22 billion ($326 million).

This growth in profits is attributed to improved profit margins, higher average prices for key petrochemical products, and an increase in both production and sales volumes.

The sector comprises 11 companies, including SABIC, SABIC Agri-Nutrients, Yansab, Sipchem, Saudi Group, Nama Chemicals, Tasnee, Advanced, Alujain, Chemanol, and Kayan Saudi.

According to their financial disclosures on Tadawul, all sector companies posted net profits in the second quarter of 2024, except for Kayan Saudi and Chemanol, which reported losses of 36% and 177%, respectively.

SABIC accounted for approximately 69% of the sector’s net profits in Q2 2024, with an 85% growth, raising its profits to SAR 2.18 billion, compared to SAR 1.18 billion in Q2 2023. SABIC Agri-Nutrients ranked second in terms of profits, achieving SAR 705 million by the end of Q2 2024, up from SAR 651 million in the same period of 2023.

Yansab saw the highest profit growth among sector companies, with a remarkable 720% increase, reaching SAR 224.8 million in Q2 2024, compared to SAR 27.4 million in the same quarter of 2023.

Mohamed Hamdy Omar, CEO of G-World, told Asharq Al-Awsat that the petrochemical sector is crucial to the Saudi market. The sharp rise in net profits in Q2 2024, led by SABIC, reflects strong recovery and growth, with the sector reporting a 62.4% increase in profits.

He further expected this performance to boost investor confidence and align with Saudi Arabia’s economic diversification goals. However, he emphasized the need for sustained growth to confirm the positive trend, especially given the sector’s sensitivity to external factors such as global economic conditions, oil prices, and geopolitical developments. These factors must be closely monitored for a more comprehensive outlook.

Financial markets expert Obeid Al-Muqati predicted that some stocks within the sector, currently trading at lower market values, could achieve new highs.

He also noted that SABIC, as the leading stock in the sector, tends to reach new highs every two to three years.

He described SABIC as an attractive acquisition target, with the petrochemical sector poised for significant growth in the coming years, potentially surpassing its previous highs.

SABIC’s movement typically influences other companies in the sector, including those in cement, gas, and manufacturing, which are all part of the Basic Materials Index, comprising 45 companies, he added.

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Saudi Arabia: Global Mining Needs $6 Trillion in Investments to Meet Demand

Saudi Minister of Industry and Mineral Resources Bandar Al-Khorayef speaks at the start of the event. (Asharq Al-Awsat)
Saudi Minister of Industry and Mineral Resources Bandar Al-Khorayef speaks at the start of the event. (Asharq Al-Awsat)
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Saudi Arabia: Global Mining Needs $6 Trillion in Investments to Meet Demand

Saudi Minister of Industry and Mineral Resources Bandar Al-Khorayef speaks at the start of the event. (Asharq Al-Awsat)
Saudi Minister of Industry and Mineral Resources Bandar Al-Khorayef speaks at the start of the event. (Asharq Al-Awsat)

The global mining industry requires $6 trillion in investments over the next decade to meet rising demand, presenting a major challenge for the sector. This figure was revealed by Saudi Minister of Industry and Mineral Resources Bandar Al-Khorayef during an international meeting of mining ministers.

The announcement underscores the mining sector’s appetite for investments, coinciding with Saudi Arabia’s increasing focus on making mining the third pillar of its national industrial strategy.

The meeting was part of the Future Minerals Forum hosted by Saudi Arabia under the theme “Creating Impact,” which gathered representatives from nearly 90 countries and over 50 organizations. The conference highlighted the vital role of mining in Saudi Arabia and the global economy.

Key topics discussed included boosting value addition in mineral-producing countries and developing green metals using advanced technologies and renewable energy.

The ministerial meeting facilitated the signing of several memorandums of understanding aimed at strengthening international partnerships and advancing Saudi Arabia’s mining and minerals sector.

In 2022, Saudi Arabia increased its estimated untapped mineral wealth from $1.3 trillion to $2.5 trillion, a move intended to support the Kingdom’s efforts to diversify its economy.

Global mining investments

In his opening remarks, Al-Khorayef stated that the global mining industry would need investments of $6 trillion over the next decade to meet growing demand, particularly driven by the global energy transition. He emphasized that metals are the foundation of supply chains and are essential for meeting the increasing demand for critical materials.

The minister also stressed the importance of continuing three initiatives launched at last year’s conference, namely, the International Framework for Critical Minerals, a network of centers of excellence to build mining expertise in the Middle East, and a priority-based approach to supply chain development.

He proposed forming a ministerial-level steering committee to oversee these initiatives and called on multilateral organizations to develop a roadmap to mitigate investment risks and enhance collaboration.

In remarks to Asharq Al-Awsat on the sidelines of the conference, Al-Khorayef said that Saudi Arabia is working closely with Arab countries, particularly those with established mining sectors like Morocco, Jordan and Egypt.

The minister highlighted the need for regional integration in mining, as companies often operate across multiple areas, stressing that mining is a key component of Saudi Vision 2030, particularly as the world shifts toward sustainable energy solutions and technologies that require large quantities of minerals.

Yonis Ali Guedi, Djibouti’s Minister of Energy and Natural Resources told Asharq Al-Awsat that his country had signed a new cooperation agreement with Saudi Arabia to enhance collaboration in the mining sector and exchange training expertise. The agreement also includes resource-sharing and highlights Djibouti’s need for Saudi investments, he added.

The minister underlined the significant role Saudi companies could play in developing Djibouti’s mining sector, while also acknowledging progress in local industries. On a broader level, Guedi pointed to the growth of Africa’s mining sector and underscored the importance of maintaining this momentum to meet global demand.

Focus on critical minerals

In comments to Asharq Al-Awsat, Julius Maada Bio, Sierra Leone’s Minister of Mines and Mineral Resources, said that financing remains the greatest challenge for his country’s mining sector.

Exploration of critical minerals, he explained, requires significant investments with high risks, a challenge faced by many African nations. Bio underscored the importance of improving Sierra Leone’s infrastructure and value chain capabilities, from exploration to processing, and expressed interest in leveraging Saudi expertise in mining.

He added that Sierra Leone is seeking to strengthen international cooperation to create a comprehensive framework for critical minerals, with a focus on sustainability.

Malaysia’s Minister of Natural Resources, Environment, and Climate Change Nik Nazmi Nik Ahmad highlighted that the key challenge for his country’s mining sector is its technological gap. He noted that advanced technologies for producing and processing rare earth minerals are concentrated in a few major countries, limiting Malaysia’s competitiveness in global markets.

The minister also pointed to geopolitical tensions disrupting global supply chains, which has complicated matters for countries like Malaysia that rely on trade with both China and the United States.

Despite these challenges, Ahmad stated that his country is working to boost its domestic processing capabilities for rare earth minerals, aiming to reduce its reliance on raw material exports.

Yemeni Minister of Minerals Dr. Saeed Al-Shamasi emphasized Yemen’s valuable mineral resources, including lithium, which is essential for batteries and renewable energy technologies. Yemen also holds reserves of copper and other strategic minerals.

He called for urgent foreign investments to develop the sector, given Yemen’s lack of advanced infrastructure. Al-Shamasi also highlighted Yemen’s efforts to strengthen cooperation with Saudi Arabia, noting the establishment of a Saudi-Yemeni Business Council to facilitate investment across various sectors.

International agreements

During the ministerial meeting, Al-Khorayef signed cooperation agreements with six countries: Djibouti, the United Kingdom, Jordan, Zambia, Austria and France. These agreements aim to strengthen international partnerships and advance the Kingdom’s mining sector.

The accompanying exhibition featured cutting-edge technologies and innovations in mining, promoting global collaboration to achieve sustainability in the sector.

Meanhwile, two global alliances, including local and international companies, won exploration licenses for six mining sites in Saudi Arabia during the seventh round of mining competitions, according to the Ministry’s statement on Tuesday.