SABIC (being acquired by Saudi Aramco), posted a 68.4% year-on-year plunge in Q2 net profit to Riyals 2.12 bln (US$565 mln) as petrochemical prices fell and new supply was added, as reported by SPGlobal Platts. Q2 revenue fell 17% year-on-year to Riyal 35.87 bln. Some of the products that suffered from weak prices include mono ethyl glycol, whose prices in Q2 were the lowest since 2009, SABIC said."The slowdown in global GDP growth coincides with a decline in petrochemical prices due to a significant increase in new supply capacity resulting in lower product prices and margins in key product lines," Yousef al-Benyan, vice chairman and CEO of SABIC, said in a statement to the Saudi stock exchange where its shares are traded. "The new capacities in key products lines that pressured SABIC's product prices and margins in the H1-2019 are expected to continue to impact the company's earnings in H2-2019."
SABIC, the Middle East's biggest petrochemical producer, has last week called off talks to form a joint venture with European specialty chemicals producer Clariant due to current "unfavorable" market conditions. SABIC, the top shareholder in Clariant with a 24.99% stake, signed a memorandum of understanding in September 2018 to combine SABIC's specialties business with the Swiss company's additives and high value masterbatch offerings. State-owned Saudi Aramco agreed earlier in 2019 to acquire 70% of SABIC from the country's sovereign wealth fund for $69 billion as part of plans to expand its petrochemicals portfolio. Both Saudi Aramco and SABIC are boosting their petrochemical footprint and inking agreements within and outside the Gulf state to gain access to feedstock and get closer to their customers. ExxonMobil and SABIC had announced in June that they are going ahead with a new build petrochemical complex in Texas, after having received all necessary permits and approvals.