The Saudi Stock Exchange's main index, TASI, rose slightly during these moments of trading, Tuesday, in conjunction with the continued suffering of the petrochemical sector (TADAWUL:2310).
Meanwhile, the Saudi petrochemical sector continues to face weakness from falling margins and oversupply in the market. The first quarter of this year will be of particular importance as it represents the first quarterly results after Aramco (TADAWUL:2222) announced a feedstock price hike in early January 2024.
Petrochemical companies reported varying degrees of impact from the decision, ranging from 1% to 4% of total cost of sales. The sector’s performance is also affected by other factors, such as product price fluctuations in global markets and scheduled maintenance, which saw one company shut down its plant for nearly a month.
Aljazira Capital expects the sector’s net profits to decline by 18.5% compared to the same period last year, to reach 963 million riyals, but it remains better than the losses recorded by the sector as a whole in the last quarter of last year.
On the other hand, SNB Capital, which covers 9 petrochemical stocks, is forecasting a significant decline in Q1 earnings on a year-on-year basis, with SABIC (TADAWUL:2010) forecasting a 27% decline in earnings. However, on a quarterly basis, the outlook is for some companies to improve and SABIC’s earnings to stabilize.
