Riyadh – Mubasher: The Saudi petrochemicals sector remained under pressure during 2019 due to lower demand, with global economic slowdown amidst trade war concerns; additional capacity coming in the market; and a decline in oil prices, according to a research note by Al Rajhi Capital.

The research firm expects spreads for most products to decline sequentially during the fourth quarter (Q4) of 2019 in the midst of weaker pricing environment and higher feedstock costs.

“We do not believe that a recovery for product prices is imminent till at-least [the first half of next year] H1-20. Among the names, Sipchem stock is best positioned in our view, as we believe Methanol prices could improve. APCC gives the best comfort for dividends and earnings stability and deserves a premium. We believe Yansab may continue with SAR1.75/share DPS in 2H 2019 but may cut in 2020 if prices do not recover,” the report noted.

Furthermore, Al Rajhi Capital Research forecasts petrochemical prices will likely remain under pressure in the near term on weak demand amid global trade concerns.