Saudi petrochemical giant sees drop in polypropylene sales

Petrotahlil - Oil refinery power station at sunset, Petrochemical industrial plant. Image used for illustrative purpose. 

Oil refinery power station at sunset, Petrochemical industrial plant. Image used for illustrative purpose.

Demand for polypropylene, which is used in the manufacture of a wide range of consumer and industrial products, has declined recently as disruptions caused by the coronavirus pandemic put a damper on global demand.

Sales volume of polypropylene fell by 8 percent during the first quarter of 2020, while prices dropped 10.3 percent, Saudi Arabia’s Advanced Petrochemical Company (Advanced) reported on Monday.

The decline, along with other factors, has impacted the petrochemical giant’s net profit for the quarter, which dropped by 35.6 percent to 104.3 million Saudi riyals ($27 million) compared to the same period in 2019 and by 45.7 percent compared to the last three months of 2019, the company said in a statement to the Saudi bourse.

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Overall, the petrochemical company’s sales/revenues dropped 17.5 percent year-on-year to 534.52 Saudi riyals ($142 million).

According to analysts, the coronavirus pandemic has impacted the plastics manufacturing chain, with some companies having to halt or slow down production.

Demand for polypropylene is expected to decline by 2.1 million tonnes this year as the world economy grapples with the financial impact of the coronavirus pandemic, according to a report by ICIS, a commodity intelligence services provider.

“Polypropylene (PP) and other polymers such as polyurethanes… that are heavily reliant on durable goods for their final consumption are at risk of suffering,” ICIS said in a report.

Once China and the rest of the global economy have recovered, then the bounce back in the daily consumption of stuff made from polypropylene is likely to take longer “because of the disruptions to global manufacturing supply chains,” the report added.

Polypropylene is used in several applications, including packaging for consumer items, plastic parts in the automotive industries and other special devices.

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