Long-term supply chain contracts cushion Tasnee against high product prices: CEO

Chief Executive Officer (CEO) Mutlaq Al Morished

National Industrialization Co. (Tasnee) holds long-term supply chain contracts, which provided a cushion against significant price increases, Chief Executive Officer (CEO) Mutlaq Al Morished told Argaam.

However, most of these deals are set to expire by the end of the year, he added.

Speaking on the sidelines of the 15th annual GPCA Forum, Al Morished said he foresees sharp increase in prices in 2022.

“The supply chain challenges are related to container leasing costs, which hit very high levels,” the CEO said. “Companies are now considering shipping without containers, but it is still difficult, due to the nature of some products.”

Demand is currently very robust, as prices have increased since mid-2020 and reached record levels. Although prices saw a correction, they are still very good for all manufacturers, Al Morished noted.

He also expects the Q4 2021 financial results to see more pressure amid higher feedstock prices.

“It is the global market situation. There is always time between the rise in feedstock costs and the increase in product prices. Global petrochemical producers leveraged on higher product prices amid low feedstock costs. Now, feedstock costs started to rise, while product prices are down,” he said.

Speaking about the Tasnee’s titanium ilmenite smelter plant, Al Morished said it is expected to faces some challenges as the technology is deemed new. The company changed all project’s designs to other viable ones, he noted.

The CEO expects the plant to begin commercial operations by the end of 2022, noting that such facilities take a long time to reach the required electricity level.

Earlier this month, Tasnee started trial operations at its ilmenite smelter project to produce titanium slag and the first batch of pig iron, Argaam reported.