In a bid to compete with European rivals like BASF AG and reduce vulnerability to price swings, Saudi Basic Industries Corp. (SABIC), plans to start making specialty products. Specialty chemicals are expected to become a very major component of SABIC's portfolio. This announcement follows SABIC's acquisition for US$685 million of Huntsman Corp.'s U.K. units, gaining plants that make ethylene, benzene and related chemicals for European markets. Sabic plans to spend US$23 billion to increase total production by 49% to 73 million tpa by 2009. By 2020, specialty chemicals like polycarbonates are forecast to constitute 25-30% of SABIC's capacity. Though the speciality chemicals do not always have better margins, their prices are less affected by cyclicality.
Petrochemical makers in the Middle East are expanding as they benefit from abundant raw materials, such as natural gas, and rising global demand for plastics, solvents and polymers. Fixed prices charged by state-run Saudi Aramco, the world's biggest oil company, ensure that SABIC converts ethane into ethylene at a cost of about US$50 a metric ton. SABIC's competitors; BASF and Dow Chemical Co rely on the alternative feedstock naphtha, priced at US$500 a ton as oil continues to trade at levels above $60 a barrel.
29-Jan-07 
