Saudi Aramco revives feedstock supplies to petrochemical firms

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Petrochemical firms that are listed on the Saudi Stock Exchange (Tadawul) said on Wednesday that there has been an improvement in feedstock supplies from Saudi Aramco following Saturday’s attacks.

The benchmark Tadawul All Share Index (TASI) rose 0.48 percent by midday on Wednesday. The materials index, on which all petrochemical firms are listed, was up 0.55 percent.

Saudi Basic Industries Corp. (SABIC), the largest petrochemical producer in the Middle East, said that its curtailment in feedstock supply for some of its subsidiaries went down from 49 percent to 30 percent.

The Tadawul-listed firm said it expects supplies to return to normal levels by September-end. Its shares rose 0.11 percent after the announcement.

“The company continues to work on evaluating the final effects to determine the financial impact,” SABIC said.

Saudi Arabia has managed to return its oil supplies to levels comparable to before Saturday’s aerial attacks on Saudi Aramco’s Abqaiq and Khurais oil-processing facilities, Energy Minister Prince Abdulaziz bin Salman said on Tuesday.

The attacks had resulted in a temporary production suspension of 5.7 million barrels a day of crude oil, 50 percent of Saudi production, and five to six percent of the world’s total oil supply.

The disruption to oil production had resulted in a shortage of feedstock for the petrochemical firms, which were forced to operate at lower production rates since Saturday.

Al Rajhi Capital, the investment arm of Al Rajhi Bank, said in a research note on Monday that the disruption could impact production by five percent this quarter (Q3 2019), and “probably include some additional costs.”

“Larger companies, such as SABIC may have the ability to redistribute available feedstock inventory among subsidiaries for a few days and mitigate the issue,” the note mentioned.“We reduce our net earnings estimates for Q3 to factor in the lower feedstock supply. On the positive side, this could push oil prices and polymer prices as well, if the increase in cost sustains.”

Tadawul-listed Advanced Petrochemical Company said on Wednesday that its curtailment went down from 40 percent to about 20 percent. Its shares rose 0.97 percent by midday trading hours.

Likewise, National Industrialization Co. (Tasnee) said in a statement to the Saudi bourse that its petrochemical complex in Jubail saw its feedstock supply shortages drop from 41 percent to approximately 25 percent. They also said levels are expected to normalize to pre-attack levels by September-end.

The company’s shares surged 2.09 percent following the news.

Saudi Kayan Petrochemical Company, which is one of the leading chemical, polymers, and specialty products producer in Saudi Arabia in the Middle East, said its feedstock supplies are now curtailed 37 percent instead of 50 percent.

Kayan’s shares were up 0.2 percent by midday trading.

The company said it expects supply to “reach normal levels by end of September as stated by the Ministry of Energy.”

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