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SABIC to build iron and steel plant in Jubail by 2012
SABIC will increase its production capacity by an estimated one million tons yearly, as Saudi market demand escalates
April 20, 2010 11:36 by Katherine Azmeh
Saudi Basic Industries Corp. (SABIC) will build a new iron and steel plant in Jubail Industrial City by 2012. The plant will have with an annual capacity of one million tons in order to meet the increasing demand in the local market, said Muhammad Al-Mady, chief executive officer of SABIC.
He said iron and steel prices would depend on the supply and demand. “Efforts are also under way to lift the customs tariff on steel but so far, no decision has been taken in this respect,” he said speaking to reporters in Riyadh.
SABIC, which increased iron and steel production by seven percent, captured 62 percent of the local market in the first quarter of this year. “I am sure that growing production will meet the increasing demand.”
Speaking about rising steel prices, Al-Mady said: “We believe that the problem is not with prices but with declining production in some factories. We hope that a rise in prices will encourage some local factories to resume production,” he said.
Al-Mady said SABIC had not made any big profit as a result of the increase in steel prices because of a rise in prices of raw materials. Prices had gone up by 35 percent to SR700 per ton, he added.
The company increased steel prices by SR100 per ton in March, especially for rebar. “We also decided to increase prices on April 12 after the prices of raw materials went up by 100 percent,” he pointed out.
He emphasized SABIC’s ability to overcome financial crisis and achieve continuous growth. “The completion of projects at Sharq and Yansab in the Kingdom and the joint venture in China would increase the company’s profit this year,” he said.
SABIC made a net profit of SR5.43 billion in the first quarter of this year against the losses worth SR970 million it suffered during the same period last year. The company’s first quarter profit last year amounted to SR4.58 billion.
SABIC’s total profit in the first quarter of 2010 grew by 238 percent to reach SR12.22 billion compared to SR3.62 billion in the first quarter of 2009. The profitability of its share grew by SR1.81 per share against a loss of SR0.32 per share during the same period last year.
He said the future of petrochemicals and iron and steel products depended largely on the global economic recovery. “The rise in prices means the international economy is improving in a reasonable way.”
He expressed his satisfaction over the increase petrochemical prices, adding that SABIC’s new factories would start supplying their petrochemical products this year. “We have huge production capacity,” he said, adding that Saudi Arabia, China and Europe are the company’s important markets.
Speaking about SABIC joint ventures in China, he said they would be able to compete with plants in the Gulf thanks to low production cost, which is 50 percent less than those of in the Gulf.
Meanwhile, the company’s Annual General Meeting has approved the payment of SR4.5 billion to shareholders on record with Tadawul at the end of the day of the AGM. Chairman Prince Saud bin Abdullah bin Thunayan said the levels of growth the company achieved during the past five years placed SABIC among the leading chemical companies in the world.
SABIC ranks among the world’s top six petrochemical companies with 19 world-class complexes in Saudi Arabia. Elsewhere, SABIC manufactures on a global scale in the Americas, Europe and Asia Pacific. SABIC’s overall production has increased from 35 million metric tons in 2001 to 59 million metric tons in 2009.
The company is among the world’s market leaders in the production of polyethylene, polypropylene and other advanced thermoplastics, glycols, methanol and fertilizers. The Saudi government owns 70 percent of SABIC shares with the remaining 30 percent held by private investors in Saudi Arabia and other GCC countries.