What are global petrochemical giants doing amid the industry’s 'low-activity' phase?

SABIC (Saudi Basic Industries Corporation) Systematically advancing localized cluster development and selective global expansion As the leader of Saudi Arabia’s petrochemical industry, SABIC demonstrates a ‘systems engineering’ mindset in its domestic development—centered on the Jubail Industrial City—integrating project implementation, deep local integration of industrial chains, low-carbon infrastructure construction, and capital operations. Globally, SABIC’s strategy reflects a more resolute approach to ‘selection and abandonment’. In Asia—especially China—the company is building a complete, localized supply chain spanning from basic feedstocks to high-performance materials via its flagship project, the Fujian Gulei world-class integrated petrochemical complex, along with investments in companion engineering plastics compounding facilities. This aims to embed deeply into Asia’s high-growth markets. Simultaneously, SABIC is expanding production capacity for polyphenylene ether (PPE) oligomers—used in printed circuit boards (PCBs) for AI servers and 5G base stations—to directly target the high-growth, high-value-added electronics and electrical sector. In stark contrast, following the permanent shutdown of its cracker units in Teesside (UK) and elsewhere, SABIC has escalated its stance toward high-cost European assets—from ‘shutdown optimization’ to ‘strategic exit’. LG Chem Shifting momentum: focusing on battery materials and green transition LG Chem has submitted a restructuring plan for its domestic petrochemical business, optimizing—or even cutting—certain traditional capacities to cope with industry-wide profitability pressures. In sharp contrast stands its aggressive push and market lock-in within the battery materials segment. Technologically, LG Chem is promoting its innovative ‘Lithium-free Precursor-Free’ (LPF) cathode material and has commenced mass production, aiming to reduce both costs and carbon footprint by shortening the process chain. Market-wise, North America has become its strategic priority. This combination of ‘technological differentiation + localized supply chain + long-term order binding’ underscores its firm commitment to capturing the certainty of electrification. Mitsubishi Chemical Group Focusing on high-value-added sectors Mitsubishi Chemical Group is explicitly channeling growth resources into high-value-added material sectors such as electrification, semiconductors, and food packaging. On sustainability, its initiatives are evolving from plastic chemical recycling toward more advanced carbon-circular technologies. The commissioning of a chemical recycling facility at its Ibaraki plant—developed jointly with ENEOS—marks a strategic shift from R&D demonstration to commercial operation, aiming to establish a stable supply of recycled raw materials. Meanwhile, in collaboration with Mitsubishi Gas Chemical and others, it will launch, by 2026, a carbon-circular demonstration project producing methanol—and subsequently propylene—from steel mill CO₂.

The PCB sector surges collectively! Which undervalued, fundamentally strong sub-sector leader remains the sole severely underappreciated stock—and why have Social Security Funds rushed in?

Traditional businesses—i.e., synthetic resin products—generated revenue of RMB 5.661 billion, up 5.9% year-on-year; gross margin stood at 23.8%, up 3.1 percentage points year-on-year. In 2025, synthetic resin sales volume reached 797,000 tons, up 14.6% year-on-year. This volume growth improved capacity utilization rates—a key driver behind the gross margin expansion. The Advanced Electronics & Battery Materials division generated revenue of RMB 1.66 billion, up 33.7% year-on-year; gross margin was 32.2%, up 4.8 percentage points year-on-year. Sales volume for Advanced Electronics & Battery Materials reached 83,500 tons, up 21.0% year-on-year; average selling price reached RMB 19,900 per ton, up 10.4% year-on-year—achieving simultaneous growth in both volume and price. Key growth contributors included high-end PCB resin materials such as PPO, OPE, and OBV hydrocarbon resins. The Biomass division generated revenue of RMB 1.106 billion, up 15.7% year-on-year; gross margin was 6.6%, down 7.7 percentage points year-on-year. The Biomass division remains the company’s primary drag, posting an overall loss of RMB 110 million. 03 Value Research Institute Underwhelming Q1 performance In Q1 FY26, the company achieved revenue of RMB 2.671 billion, up 8.6% year-on-year; gross margin was 26.2%, up 2.1 percentage points year-on-year and up 0.1 percentage point quarter-on-quarter. Q1 FY26 net profit attributable to shareholders amounted to RMB 177 million, down 14.2% year-on-year; non-recurring net profit totaled RMB 173 million, down 9.5% year-on-year. The decline in Q1 FY26 net profit was primarily attributable to share-based payment expenses of approximately RMB 45 million. Excluding this impact, net profit attributable to shareholders was RMB 219 million, up 6.64% year-on-year; non-recurring net profit was RMB 215 million, up 12% year-on-year. Even after adjusting for share-based payment expenses, this result still fell short of market expectations. The core reason remains insufficient capacity for high-end electronic resins—such as PPO and OPE—limiting earnings release. According to management disclosures, the company currently operates four PPO/OPE production lines, with total capacity of ~1,300 tons, plus one OBV line with 100-ton capacity. A fifth 300-ton line is scheduled to commence operations before end-June; additionally, a new 2,000-ton project is planned for completion before year-end. A new 1,000-ton OBV hydrocarbon resin project is slated for commissioning next year. 04 Value Research Institute Outlook and valuation In early April, SABIC—the global PPO resin leader—halted production at its Saudi facility, impacting 25–30% of its capacity. Consequently, SABIC significantly raised resin prices: PPO resin jumped from RMB 650,000/ton to RMB 1,000,000/ton; OBV resin rose from RMB 1,800,000/ton to RMB 2,500,000/ton. This may create opportunities for domestic manufacturers—including Shengquan—to achieve import substitution among high-end customers. Shengquan’s pricing typically runs at ~80% of SABIC’s. Applying these new benchmark prices, projected annual revenue from 3,600 tons of PPO resin and 1,000 tons of OBV resin would reach ~RMB 6 billion. Assuming a 25% net profit margin, this would generate ~RMB 1.5 billion in net profit—valued at 30x P/E yields a market cap of RMB 45 billion. The company’s current market cap stands at RMB 32 billion, corresponding to a static P/E of 32x for FY25—indicating substantial upside potential. Of course, this scenario hinges on smooth capacity ramp-up, sufficient yield rates, and successful customer acquisition—all of which remain subject to verification over the coming quarters.

Saudi SABIC swings to Q3 profit on higher sales volumes despite shipping disruptions

19 hours ago

Saudi SABIC swung to a $133 million net profit in Q3 2026, reversing a loss thanks to higher sales volumes and lower feedstock costs despite shipping disruptions.

icis

2026-10-26

Saudi SABIC swings to Q3 profit on higher sales volumes despite shipping disruptions

Saudi SABIC swings to Q3 profit on higher sales volumes despite shipping disruptions

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