By Malini Hariharan
Yansab posted a net profit Saudi Riyal (SR)502.4m ($134.0m) in the second quarter, its first full quarter of commercial operations. However, results could have been better if its plants had run at full capacity.
Analysts at NCB Capital estimate that average utilization rate was below their expectation of 93% for the quarter.
"We had assumed a similar 93% utilization rate for the remainder of the year, however will likely reduce this somewhat as the company ramps up production at a slightly slower pace than our original outlook," said NCB in a recent report.
Yansab's 1.3m tones/year cracker is based on 38% ethane and 62% propane feedstock mix.
In an earlier report this year NCB had referred to problems faced by Yansab in securing its full feedstock allocation.
"Yansab receives 35,000 barrels per day of propane from Aramco, which is actually 10,000 barrels per day below its full requirement. As a result, the ethylene cracker will likely run at a sub-optimal utilization rate. Though Sabic is seeking approval for additional propane from Aramco, we believe it may be difficult to secure this due to rising domestic demand amid limited supply."
Sabic has a 51% stake in Yansab.
It also pointed out that the full feestock allocation (35,000 bbls/day of propane and 80m cubic feet/day of ethane) was sufficient to produce only 1.25m tones/year of ethylene and 325,000 tonnes/year of propylene, which would imply an operating rate of 93%.
The blog has been regularly hearing and reporting about feedstock issues constraining operations at Saudi crackers. It also appears that there is a mismatch in plant capacity and feedstock allocation and achieving 100% operating rate is unlikely to take place very soon.