Middle Eastern plastic converters need consolidation - SABIC

15 June 2010 20:35  [Source: ICIS news]

DUBAI (ICIS news)--Plastic converters in the Gulf Cooperation Council (GCC) region should consolidate to achieve economies of scale, a move that could benefit an industry already enjoying better margins than their counterparts in the US, EU and Asia, a SABIC executive said on Tuesday.

“GCC converters have many advantages such as proximity to feedstocks and relatively low energy and labour costs,” said Khaled Al-Mana, executive vice president, polymers, with Saudi Basic Industries Corp (SABIC), addressing delegates at the Gulf Petrochemicals and Chemicals Association (GPCA) Plastics Summit.

Plastic processors in the GCC achieved margins of 10.5% in 2009, compared with 8.6% in the US, 6.8% in the EU and 3.3% in Asia.

A major problem in the converting industry in the region was fragmentation, he said. “There are 1,100 plastic converters in the GCC, but only 10% are reasonably sized,” he said.

There was tremendous scope for GCC converters to consolidate and achieve economies of scale, he said. “Polymer producers could provide support to converters, but the major initiative for innovation has to come from the converters themselves,” he said.

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By: Prema Viswanathan
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