Petchems R&D to emerge from downturn - Al-Mady

03 December 2008 11:53  [Source: ICIS news]

DUBAI (ICIS news)--Research and development (R&D) activities are an important element in difficult economic times and will lead to the evolution of a stronger petrochemical industry, said Saudi Basic Industries Corp (SABIC) vice-chairman and CEO Mohamed al-Mady on Wednesday.

“Past periods of difficulty for our industry have led to bursts of innovation in processes and products,” said Al-Mady at the 3rd Gulf Petrochemical and Chemicals Association (GPCA) forum.

A more resilient industry would emerge from the period that market players are currently reeling under, said Al-Mady.

Al-Mady also said that stock markets, which have been rattled by the US economic crisis, are signalling that global economic growth will slow, with some major regions in the west moving into recession.

As the US was recently declared to be in an official recession, global markets fell on news that the world’s largest economy had been experiencing negative economic growth since December 2007.

“The credit crisis in Wall Street has global implications as international banks become more risk averse. Projects, even in this region, may be exposed to more stringent lending practices and higher interest rates on loan,” Al-Mady said.

New capacities, especially in the Middle East, that are due to come on stream in the next few years will exacerbate the problem of slow growth and create an even more challenging environment for the petrochemical industry, Al-Mady said.

Al-Mady also highlighted the importance for companies to address the issue of climate change.

He said that the international community is recognising that global warming is a crucial issue for the environment.

“This is a serious issue which will clearly have a substantial impact on our industry and must be followed closely, although the scope of this impact is not yet clearly defined,” he said.

The three-day GPCA forum ends on 4 December.

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By: Bohan Loh
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