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(Bloomberg) — The head of Saudi Arabia’s largest chemicals producer warned of another difficult year for the industry in 2024, as the outlook for the global economy remains weak. 

Demand for chemicals — used to make plastics that go into anything from cars to mobile phones — has been hit by sluggish growth amid a slower-than-expected rebound from the Covid-19 pandemic. Margins in the sector have also been squeezed by inflation and higher energy costs.

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Profit at Saudi Basic Industries Corp., the chemicals maker known as Sabic, has declined for five consecutive quarters year-on-year. It’s unclear whether the industry will rebound next year, said Abdulrahman Al-Fageeh chief executive officer of the company that’s owned by state oil producer Saudi Aramco.

This “was a bad year for the chemical industry,” the CEO said last week in an interview on the sidelines of a conference in Doha. “I’m not sure whether 2024 is going to have any pickup. It does not seem to be.”

Sabic’s varied portfolio of products has supported the Riyadh-based company’s margins, Al-Fageeh said. The company has capitalized on better conditions in agriculture and automotive businesses, he said. 

Sabic is focused on developing technology to turn crude oil into chemicals, something it’s working on with Aramco, Al-Fageeh said. Traditionally, oil producers like Saudi Arabia have sold their crude to refiners, which process it into transport fuels and feedstocks for the chemical industry.

Now, as producers like Saudi Arabia prepare for a future in which oil demand, particularly for transport, is set to decline, Aramco and Sabic aim to funnel more crude into chemicals that will produce plastics for lightweight vehicles, batteries or mobile phones.

Sabic is working with Aramco on a 400,000 barrel-a-day crude-to-chemical facility planned for Ras Al Khair, an industrial city on Saudi Arabia’s east coast. 

Al-Fageeh declined to comment on whether Sabic planned to sell a plant in the US. Bloomberg reported last month that the company and its partner TotalEnergies SE were considering selling a chemical plant in Louisiana. 

The company is looking to internal expansion to boost growth, he said.

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