By Malini Hariharan

It is the results season and numbers posted so far confirm that the last quarter has been rough with depressed demand, weak product prices and firm feedstock costs affecting earnings.

Siam Cement Group’s EBITDA for the chemicals division dropped 25% in Q4 from the previous quarter, while sales revenue declined by 5%. This was despite a 9% jump in polyolefin sales volume (mainly from exports) during the same period. Profit for Q4 was down 79% and down 51% for the full year , partly because of reduced margins, said the company in a presentation to analysts.

Indian major Reliance Industries posted a 11% drop in EBIT in Oct-Dec 2011, compared with the previous quarter. Sales revenues were down 6%.

In a presentation to analysts Reliance highlighted the challenging environment for the petchem industry last year: stagnation in Chinese imports, rising exports from the Middle East (exports have doubled in last 5 years to 15.5m tonnes and increased by 2.2m tonnes in 2011), high oil and naphtha prices resulting in a cost push during a period of demand slowdown.

The Indian market was also weak with polypropylene (PP) and polyethylene (PE) demand declining 6-7% during October-December, from the previous quarter, said the company. PVC was the only exception posting a 21% jump in demand during this period. For the 9 months ended 31 December 2011, Indian polymer demand was up only 4%, a dramatic change from the robust markets seen in 2010.

It was a similar story in the polyester market which was affected by cautious buying and reduced demand as a result of a power shortage in parts of the county. Overall polyester demand was down 2% during April-December 2011.

Middle East companies were also not spared. SABIC attributed lower prices for the worse-than-expected decline in its fourth-quarter earnings, which were down 10% year on year and 36% lower than in the third quarter.

SABIC said that its volumes had been higher during the reporting period but that it had been hit by lower selling prices. A loss at the Saudi Kayan joint venture also clearly dented the net result.

The company’s results surprised financial analysts with a fourth-quarter net income of Saudi riyals (SR) 5.2bn ($1.4bn), 44% lower than the consensus estimate of SR7.4bn.

Korean companies have yet to announce their results but analysts are forecasting weak numbers for Q4 2011.

In a recent report on Korean companies, analysts at Woori Investment & Securities said they expected sales of petrochemical companies under their coverage to decline 5.9% quarter on quarter while operating profit was likely to be down 36.5%.

Among the Korean companies, they expected LG Chem to post relatively solid earnings compared to its peers thanks to solid earnings at the company’s information and electronic materials division. Honam Petrochemical was expected to post sluggish earnings due to operating losses at overseas subsidiary KP Chem. Kumho Petrochemical was likely to miss consensus due to poor BPA margins and one-off losses and Hanwha Chem was also expected to fall short of market expectations on continued operating losses in its solar business.


China set for aromatics expansion


By Malini Hariharan China is preparing to bring onstream huge capacities for aro...

Learn more

More PTA for India


By Malini Hariharan India trails far behind China in the polyester business but ...

Learn more
More posts
Exporters of PP and SM to China seem to have options other than shutdowns, but not PX exporters

By John Richardson DIFFICULT choices lie ahead for exporters of polypropylene (PP), styrene monomer ...

China polyethylene and ethlyene glycols in 2021: country-by-country outlook for exporters

By John Richardson CHINA’S polyethylene (PE) imports could be at either 19.8m tonnes in 2021 or 16...

China’s PE imports in 2021 could be as high as 19.8m tonnes or as low as 16.8m tonnes

By John Richardson IN SCENARIO 3 in the above chart, China would import 16.8m tonnes of polyethylene...

China may next year import 66% less PP from South Korea than in 2020, 72% less styrene from Saudi Arabia

By John Richardson All the numbers that follow are my estimates only and are not the official ICIS n...

China’s planned economy boosts global petchems this year but poses a self-sufficiency threat in 2021

By John Richardson IT IS always useful to develop a good plan and then effectively implement the pla...

Why history, culture and politics will give you the petrochemicals answers you need

By John Richardson ALBERT EINSTEIN knew a thing or two about data, including searching for entirely ...

No change in China’s policies seem likely under a Biden and Harris White House

By John Richardson WE NEED to talk about politics without being political – a very difficult t...

China petrochemicals rebound provides major global demand boost

By John Richardson WOW yet again. China’s export-led economic recovery continues to support global...


Market Intelligence

ICIS provides market intelligence that help businesses in the energy, petrochemical and fertilizer industries.

Learn more


Across the globe, ICIS consultants provide detailed analysis and forecasting for the petrochemical, energy and fertilizer markets.

Learn more

Specialist Services

Find out more about how our specialist consulting services, events, conferences and training courses can help your teams.

Learn more

ICIS Insight

From our news service to our thought-leadership content, ICIS experts bring you the latest news and insight, when you need it.

Learn more