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(Bloomberg) — The head of Saudi Arabia’s largest chemical maker warned of a tricky year for the industry in 2024 as the outlook for the global economy remains weak.
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Demand for chemicals – used to make plastics used in everything from cars to mobile phones – has been hit by a slow expansion amid a slower-than-expected rebound from the Covid-19 pandemic. The sector’s margins have also been reduced by inflation and emerging powers. costs.
Profits at Saudi Basic Industries Corp. , the chemical maker known as Sabic, have declined for five straight quarters from a year earlier. It’s not clear that the industry will recover next year, said Abdulrahman Al-Fageeh, chief executive of the company owned by state-owned oil maker Saudi Aramco.
“It’s been a bad year for the chemical industry,” the chief executive said last week in an interview on the sidelines of a convention in Doha. “I’m not sure of a recovery in 2024. No seems to be the case.
Sabic’s varied portfolio of products has supported the Riyadh-based company’s margins, Al-Fageeh said. The company has capitalized on better conditions in agriculture and automotive businesses, he said.
Sabic is focusing on converting crude oil into chemicals, a task it is carrying out with Aramco, Al-Fageeh said. Traditionally, oil manufacturers like Saudi Arabia sell their crude to refiners, who turn it into transportation fuels and raw fabrics for the chemical industry.
Now, as manufacturers like Saudi Arabia prepare for a future in which demand for oil, especially for transportation, will decline, Aramco and Sabic aim to channel more crude into chemicals that will produce plastics for light vehicles, batteries or mobile phones. The telephones.
Sabic is working with Aramco on a planned 400,000-barrel-per-day crude-to-chemical processing plant in Ras Al Khair, a commercial city on Saudi Arabia’s east coast.
Al-Fageeh declined to comment on whether Sabic planned to sell a plant in the US. Bloomberg reported last month that the company and its partner TotalEnergies SE were considering selling a chemical plant in Louisiana.
The company is looking to internal expansion to boost growth, he said.
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