Saudi Arabia’s non-oil exports plunged in December, most likely due to a big drop in petrochemicals and plastics prices.
The kingdom’s central department of statistics reported yesterday that non-oil exports fell to 16.75 billion Saudi riyals (Dh16.39bn) in December, down 3.5bn riyals, or more than 17 per cent, from a year earlier.
Although the monthly report offers no breakdown by sector, the petrochemicals and plastics sectors each consistently account for slightly more than 30 per cent of Saudi’s non-oil exports, according to the NCB Saudi Economic Review, and were likely largely responsible for the hit to exports as their market prices are linked to oil prices.
The Saudi monthly trade report said that imports were almost exactly the same in December as they were the previous year, at 52.4bn riyals, cutting into the country’s balance of trade surplus.
The UAE was also likely to have been hit by the decline in Saudi exports, after last year’s surge in exports from the kingdom to the UAE put it ahead of China as the top destination for Saudi non-oil goods.
The UAE has been building its position as a trading hub and that will be further boosted by the ramp-up of the US$20bn Sadara petrochemicals plant at Jubail Industrial City – a joint venture between Dow Chemical and Saudi Aramco – which starts production this year and will be one of the world’s largest when it is fully operational in 2017. Sadara will be using the UAE as the trading hub for its annual sales of up to $8bn.
That is a boon for UAE trade – adding more than 2 per cent to its annual trade volume – although it also increases its exposure to the vagaries of the petrochemicals cycle.
Reflecting the sector’s current weakness, Saudi Basic Industries Corp – known as Sabic – the world’s largest petrochemicals company, last month reported a drop of 29 per cent in fourth-quarter earnings to 4.36bn riyals.
amcauley@thenational.ae
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