APLA ’07: SABIC Saudi starts seen price neutral

17 November 2007 16:36  [Source: ICIS news]

By John Waggoner

BUENOS AIRES (ICIS news)--SABIC’s arrival on stream with 2.6m tonnes/year of Saudi ethylene production in 2008 or 2009 won’t pull down prices immediately, vice president for polyolefins Robert Bauman of Nexant said from the sidelines of an important industry meeting that began on Saturday.

Speaking from the venue for the Latin American Petrochemical Association (APLA) annual meeting, Bauman said that SABIC’s ability to produce at lower costs would not necessarily translate into selling at lower prices.

That is because the timing of the plant starts may catch the last of the current upward trend in olefins pricing, he said.

“The impact of SABIC’s Saudi plants will not be significant on prices,” he said.

The Saudi plants could begin to set prices in late 2009 or 2010, rather than follow the global prices set by existing production facilities around the world, he added.

Bauman brushed aside concerns by some in the industry that projects in the kingdom, along with others in the Middle East, face potential delays from scarcity of manpower, increased material costs, high energy prices and transportation costs.

Four ethylene projects are planned to go on stream in 2008 in the kingdom, including SABIC's ventures in Eastern Petrochemical (Sharq), a 1.3 m tonne/year facility, and Yanbu National Petrochemical (Yansab), a 1.3m tonne/year facility.

SABIC’s chief executive Mohamed Al-Mady earlier this month told ICIS news that the two projects would not suffer significant delays.

Bauman said that SABIC remains well supplied in the kingdom with labour and infrastructure that will assist the company in meeting a rapid start-up date once the projects are finished, adding that the company has astute buyers.

“The plants could start within weeks from building,” he said.

By: John Waggoner
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