Q3 profitability of Gulf petrochemical industries increased by 51.8 %

09-Nov-09

Third quarter profitability of Gulf petrochemical industries increased by 51.8% and sales revenues increased 15.2%, as per a study by the Global Investment House (GIH). Regional sales revenue in Q3-09 grew to US$8.4 bln (Dh30.8 bln) vs Q2-09 figures while profitability increased to US$1.4 bln vs Q2. The key factor impacting growth is the improvement in crude oil prices during Q3-09 pegged about 14.7% higher than Q2-09, and 16.9% higher than Q4-08. Average price of ethylene increased from US$230/ton seen in Q2-09 to US$953.3/ton in Q3-09- a staggering 86.9% growth. Propylene prices spiked about 133% in this period. Most of the region's production capacity, lying idle for the past six months on subdued demand, has revived this quarter. Petrochemical capacity utilisation in the region improved to 55% from the 40% levels of Q4-08. Profitability of the petrochemical industries in the region is expected to show a decline of 5 to 5.5% in the next quarter mainly due to the limited price and volumetric growth and absence of impairment cost reversal impact.