Al-Sharq Pipe for Arabic: Shipping disturbances delay raw materials.. and we aim to increase production capacity

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The acting CEO of the East Pipes Integrated Manufacturing Company, Mohammed Darwish, said that the decline in the company’s profits during the second quarter was not due to weak demand, but rather to the delayed arrival of raw materials, which affected the volume of production and sales, in conjunction with a significant increase in shipping and insurance costs.

Darwish explained, in an interview with Al Arabiya Business, that the company was forced to transfer shipments of raw materials from Dammam to the ports of the western region, including Jeddah and Yanbu, as a result of the current circumstances, expecting profit margins to return to their normal levels with the decline of geopolitical tensions and the regularity of maritime traffic. He pointed out that the profit margin during the second quarter remained close to 23% despite the difficult operating conditions.

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He added that during September, the company signed several contracts with Saudi Aramco, with a total value exceeding one billion riyals, and the revenues of some contracts are scheduled to be recorded in full during the fourth quarter of the current year, while the implementation of the largest contract, which lasts for six months, extends between the fourth quarter of 2026 and the first quarter of 2027, in accordance with the delivery schedules and accounting standards approved in the Kingdom.

Darwish pointed out that the main risk facing the company is the timing of the arrival of raw materials related to geopolitical developments, explaining that the company has strengthened its precautionary measures through early planning for purchases, diversifying the supplier base, and ensuring the availability of materials and their compliance with specifications. It also moved from a policy of maintaining a stock sufficient for three months to contracting for the entire raw material needs associated with contracts, some of which may extend implementation periods to 24 or 36 months, in anticipation of unexpected developments.

Regarding production capacity, he said that the fifth line, which began commercial production in March 2026, has a nominal production capacity of about 100,000 tons, and it contributed to raising the company’s nominal capacity to about 500,000 tons annually. Actual production may reach 60 thousand tons annually, depending on the pipe diameters and thicknesses.

He stressed that the factories and the new line are fully ready, and that the exploitation of available energy is linked to the regular supply of raw materials. He expected a noticeable increase in demand during the coming period from the water, oil and gas sectors, noting that the company is studying market trends and expected demand compared to available capacities to determine its expansion needs.

He added that the company is currently implementing a project to double the production capacity of the packaging factory, from the current 4.4 million square meters to 8.5 million square meters.