GCC Petrochemical Sector Quarterly – 1Q13
• GCC petrochemical capacity grew by 5.5% YoY during 2012
• Sector profit fell by 7.9% YoY but was up 12.3% QoQ
• Gross margin dropped marginally to 31.3% in 1Q13 from 31.6% in 1Q12
• Muntajat takes up sales activities of all petrochemical companies of Qatar
GCC petrochemical capacity grew by 5.5% YoY during 2012
GCC petrochemicals capacity has reached 127.8mn tons representing a 5.5% growth from the previous year. Saudi Arabia maintained its leading position as the region’s largest petrochemical producer with 86.4mn tons of capacity, representing 67.6% of the total regional capacity. Qatar continued to perform and now accounts for 13.2% of the region’s total with production capacity amounting to 16.8mn tons, while Oman’s petrochemicals capacity reached 9.5mn tons equivalent to 7.4% of the region’s total. These three nations confidently continued their strategic expansions, adding capacity during the year. Saudi Arabia led with 6mn tons coming on stream followed by Oman bringing online 0.6mn tons and Qatar 0.2mn tons on stream. The UAE continued its integrated expansion program and production capacity now represents 4.8% of the total regional capacity. Kuwait with 7.6mn tons of production capacity accounts for 5.9% of the Gulf regional capacity, while Bahrain at 1.4mn tons represents 1.1% of the total regional capacity.
GCC petrochemical companies profit fell 7.9% YoY but was up 12.3% QoQ
GCC petrochemical companies 1Q13 earnings declined by 7.9% YoY to USD2.90bn compared to USD3.15bn in the same period last year. On a QoQ basis the earnings rose by 12.3% mainly because of higher income reported by SABIC, IQ, DANA & TASNEE. First quarter performances of various petrochemical companies was better than the previous quarter as prices of various petrochemical products increased along with that production of some companies rose as in the previous quarter few of them witnessed shutdowns. Within the GCC petrochemical companies, Global Research Petrochemical Universe results remained flat as the profitability went down only by 0.1%.
Gross margin of the sector dropped marginally to 31.3% in 1Q13 from 31.6% in 1Q12
Petrochemical companies under Global Research coverage reported marginally drop in the gross margin on YoY basis. Gross margin in 1Q13 stood at 31.3% despite 4.0% YoY drop in the revenue. Cost on the other hand declined by 3.6% which gave some support to the margins. Among Global’s universe, DANA’s margins dropped the most by 15.2pps followed by 10.6pps drop reported by SIPCHEM. Industries Qatar witnessed the most increase in margins by 3.6pps.
Muntajat takes up sales activities of all petrochemical companies of Qatar
Qatar produces various chemicals, polymers and fertilizers, supplying and supporting the growth of a wide number of industries around the world. The country has further plans of investing USD25bn in the sector by 2020. Aligned with such a vision, the government launched Qatar Chemical and Petrochemical Marketing and Distribution Company (Muntajat) which holds exclusive rights to purchase, market, distribute and sell Qatar’s production of all chemicals and petrochemicals starting 2013.
