Saudi SABIC to build factories in China, India

DUBAI (Reuters): Saudi Basic Industries (SABIC), the world’s largest chemical producer by market value, plans to set up resin and engineering plastic compound factories in India and China, its chief executive told local media on Tuesday.

“There are no transport costs... and fixed production costs are much lower in China,” Chief Executive Mohammed al-Mady told Arabic daily al-Ektisadiya.

In May, SABIC announced a memorandum of understanding with China Petroleum & Chemical Corporation (SINOPEC) to build a polycarbonate production plant with an annual capacity for 260 kilo metric tonnes. The plant will be operational by 2015.

The petrochemicals giant is also looking at opportunities to buy local companies, the executive told the paper, without providing further details. SABIC already owns a majority stake in Yanbu National Petrochemicals Co (Yansab).

The company made a record net profit of 8.2 billion riyals ($2.2 billion) in the third quarter and says that its projects in China are profitable.

“SABIC’s products in China are competitive and making good profits because of the rapid growth in petrochemical production in China over the last several years,” al-Mady said.

SABIC, 70 percent-owned by the Saudi government, benefits from access to cheap energy, giving it a competitive advantage over global rivals such as U.S. chemical giant Dow Chemical Co .