The head of Saudi Basic Industries Corp., or SABIC, called 2023 a “bad year” for the chemicals industry and said the outlook for 2024 is uncertain, Bloomberg News reported on Dec. 11.
SABIC’s year-over-year profit has declined for five consecutive quarters, Bloomberg noted. The industry is grappling with slow growth with shrinking margins impacted by inflation and higher energy costs.
SABIC’s diversified portfolio has helped the company reduce the impact of the downturn, CEO Abdulrahman Al-Fageeh told Bloomberg. The company also is working with Aramco to develop technologies that convert crude oil into chemicals rather than selling it directly to refiners Al-Fageeh told Bloomberg. The strategy is aimed at helping the company hedge against lower demand for fossil fuels in transportation.
Slowing demand from the automotive and housing industries, which are large end users of chemicals, are both contributing to the chemical industry downturn, the American Chemistry Council reported in its year-end outlook.
While growth in vehicle sales is expected to remain flat in 2024, ACC states chemistry-intensive electric vehicles account for a larger share of vehicle sales in the United States. Housing starts also have fallen from 1.55 million in 2022 to 1.39 million in 2023. With rising unemployment and high borrowing costs, ACC expects housing to edge lower to 1.35 million in 2024.
ACC’s longer-term outlook shows prospects for U.S. chemistry “remain positive with competitive energy fundamentals and the resurgence in U.S. manufacturing from once-in-a-generation legislative initiatives to promote clean energy, infrastructure, and a strong domestic manufacturing base.”