Gulf petchem industry 'hurt by India, China'
Dubai, December 7, 2009
Petrochemical anti-dumping measures taken by India and China this year have interrupted the trade flows and hurt businesses in the Gulf region, chief executive of Saudi Basic Industries Corp (Sabic) said on Monday.
'During an economic crisis anti-dumping measures have been taken by many countries and companies as a form of protectionism which is affecting trade flows,' said Mohammed al-Mady during a conference in Dubai.
'The Gulf has been affected by India and China's anti-dumping measures and we can't wait till the World Trade Organization issues something, action needs to be taken now.'
Despite this challenge, al-Mady believed that market activity has picked up during the second half of this year and will continue in 2010.
'It's been a sluggish recovery, not what we had hoped for but we are seeing positive signs for next year.'
Last year, state-owned Sabic cut 1,000 jobs from its global plastics operations to reduce costs.
'We had cut jobs in the US plastic unit because the demand wasn't there...hopefully there are good signs now but we will continue to monitor the situation,' he said.
Sabic bought General Electric's plastics unit in 2007 for $11.5 billion and later renamed it Sabic Innovative Plastics.
By 2015, the manufacturing of petrochemical products in the Gulf will reach 115 million tonnes, said Abdulwahab al-Sadoun secretary general of Gulf Petrochemicals and Chemicals Association (GPCA), the regional umbrella organisation of petrochemical and chemical producers in the region.
'By next year we are expecting around 10 million tonnes increase in production from plants in Saudi Arabia and Abu Dhabi,' he told reporters.
However financing new projects will be the biggest challenge facing companies as banks had tightened leading.
'Before, getting $10-20 billion for a project could be done in three months, today you have to sweat it out,' said al-Mady.
'Now companies would have to rely on government institution funds to take part in projects as financing will be a challenge.'
Sabic is considering new plants to boost total production to 130 million tonnes of petrochemicals by 2020, up from 56 million tonnes in 2008, which would require more plant, al-Mady said.-Reuters