The CEO of Saudi Arabia’s largest chemicals producer, Abdulrahman Al-Fageeh, has cautioned that the industry is likely to face another challenging year in 2024 due to the weak global economy. The demand for chemicals has been negatively impacted by slow growth following the Covid-19 pandemic, along with inflation and higher energy costs.
Sabic, also known as Saudi Basic Industries Corp., has experienced declining profits for five consecutive quarters. Al-Fageeh expressed uncertainty about a potential rebound in the industry next year. He stated, “This was a bad year for the chemical industry… I’m not sure whether 2024 is going to have any pickup. It does not seem to be.”
Despite these challenges, Sabic has managed to maintain its margins through its diverse portfolio of products, particularly in the agriculture and automotive sectors. Al-Fageeh emphasized the company’s focus on developing technology to convert crude oil into chemicals, a partnership with state oil producer Saudi Aramco. This shift aims to cater to the future decline in oil demand by producing plastics for lightweight vehicles, batteries, and mobile phones.
The company is currently collaborating with Aramco on a planned 400,000 barrel-a-day crude-to-chemical facility in Ras Al Khair, Saudi Arabia. However, Al-Fageeh declined to comment on reports of a potential sale of a chemical plant in the US. Sabic is exploring internal expansion strategies to drive growth.