SNB Cap upbeat on petchem sector in H2 2022 as China eases COVID-19 restrictions

A petrochemicals plant

SNB Capital said that it expects the Saudi petrochemical sector to witness more positive results in the second half of 2022, buoyed by easing of the COVID shutdown measures in China, coupled with government stimulus packages.

In a report, the brokerage noted that the slowdown in global economic growth, supply chain turmoil and higher raw material prices are the main challenges for the sector. However, the lifting of COVID-19 restrictions in China would support the upbeat outlook.

In May 2022, prices of most petrochemical products decreased month-on-month due to the slowdown in demand, it noted.

Given the strong correlation between the global economy and demand for petrochemical products, an economic slowdown may weigh on demand for petrochemical products and add to the uncertainty in the sector, the report noted.