Abdullah Al-Saadoun, CEO of Sahara International Petrochemical Co. (Sipchem) revealed that about 35% of the company’s products are transported via the Red Sea route and have been affected by recent disruptions.

This has led to an increase in shipping costs by 15-18%, and shipments are diverted to the Cape of Good Hope route, he noted.

Al-Saadoun added that the events in the Red Sea created challenges in exporting products from Asian producers to Europe, but at the same time they paved the way for Sipchem to increase its sales in Europe.

The company owns huge stocks in several European countries, like Italy, Spain, the Netherlands, Belgium and Germany, and its proximity to these markets helped it overcome the challenges resulting from the Red Sea disruptions. Moreover, the improvement of conditions in Bab Al-Mandab helped it boost exports to the European market, according to the official.

Regarding the company’s financial results, Al-Saadoun told Al Arabiya Business that the profit decline is due to a decrease in product prices and sales quantities, explaining that product prices fell by more than 30% YoY.

“The market prices have bottomed out in Q3 2023,” said the CEO, expressing his optimism about the rebound in product prices over the coming period, as they rose 5-6% QoQ in Q4 2023, and 5% in Q1 2024 in most of the company’s product prices.

He confirmed that, in light of the impact of rising feedstock prices, Sipchem has taken great steps over the past two and a half years to strengthen its competitiveness through a growth strategy and focus on digital transformation and human capital, pointing to the great resilience that the company enjoys to transform products and increase or decrease them according to their market prices.