SABIC chief calls for consolidation in Saudi petchems

SABIC CEO Yousef Abdullah Al-Benyan
Updated 30 October 2017
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SABIC chief calls for consolidation in Saudi petchems

RIYADH: Saudi petrochemicals firms should merge to boost their competitiveness and look to expand abroad, the head of major industry player SABIC told Reuters on Monday.
The firms have enjoyed decades of cheap feedstock prices. But Saudi authorities began slashing subsidies in 2016, as a collapse in oil prices cut into state finances, prompting a search for efficiencies in the industry.
“This program is clearly defined to push companies for more efficiencies and bring them into a mode where they become more competitive with the global players,” Saudi Basic Industries Corp. (SABIC) CEO Yousef Al-Benyan said in an interview
Other Saudi petrochemicals firms should “look at ways and means to consolidate,” he said.
“If 2020 comes and you are not really a player with a global footprint ... and you don’t market your own product, I think it will be very difficult for you to maintain competitive positions.”
SABIC has already begun this process, completing an acquisition of the remaining 50 percent stake in its SADAF project from Shell Arabia in August.
It is also considering integrating three affiliates, SAFCO, Ibn Al-Baytar and Al-Bayroni, which are located next to each other in Jubail, eastern Saudi Arabia. The companies can share feedstock, maintenance and leadership costs, said Benyan.
SABIC is looking at possible acquisitions in North America, China and Africa in both the speciality and commodities portfolios, Benyan said, but declined to elaborate.
He told Reuters in May SABIC was evaluating opportunities in the range of $3 billion to $6 billion.
OUTLOOK AND PROJECTS
SABIC posted its biggest profit since the second quarter of 2015 this quarter, as a recovery in crude prices buoyed earnings.
Sales prices for core products were up an average of 5 percent and expenses were reduced, while losses at its restructured Hadeed division dropped by more than half, said Benyan.
The company’s outlook for the rest of the year and into 2018 was stable, he added.
“We have stability in crude oil prices, we have stability in GDP growth. I think this is very positive now, looking at 2018. I think 2018 will be more or less like 2017 for us,” he said.
SABIC is also looking to expand globally to diversify feedstock inputs and shield itself from oil price fluctuations.
Plans to build a polycarbonate plant with Chinese state oil firm Sinopec are moving ahead in China, where 70 percent of demand for the product is expected to be, said Benyan.
He plans to travel to China by the end of this year to finalize arrangements for both that project and a coal-to-chemicals venture with Shenhua Ningxia Coal Industry Group.
Benyan said initial plans for an oil to chemicals project with state oil giant Saudi Aramco were to build it in Yanbu, on the west coast of Saudi Arabia.
“I think this is a very strategic location. You can strengthen your position to Africa, to Europe. Jubail still has an option to grow, but I think the west coast is going to enable us not to concentrate all our assets in one location,” he said.


EU slaps tariffs on US as trade war erupts

Updated 44 min 47 sec ago
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EU slaps tariffs on US as trade war erupts

  • Customs agents across Europe’s colossal market of 500 million people will now impose the duty, hiking prices on US-made products in supermarkets and across factory floors
  • Donald Trump claimed America had been obliged to levy the metals tariffs as it has been exploited as the world’s “piggy bank”

BRUSSELS: The EU slapped revenge tariffs on iconic US products including bourbon, jeans and motorcycles on Friday in its opening salvo in a trade war with President Donald Trump.
The tariffs, which took effect at midnight (2200 GMT Thursday) according to the EU’s official journal, will further fuel jitters on world stock markets that are already alarmed by trade tensions between the US and China.
Customs agents across Europe’s colossal market of 500 million people will now impose the duty, hiking prices on US-made products in supermarkets and across factory floors.
“These measures are the logical consequence of the US decision,” French Finance Minister Bruno Le Maire said.
“They reflect a Europe that is resolute and principled,” he said.
Brussels imposed the raft of duties on US products worth €2.8 billion ($3.3 billion) in a tit-for-tat response to Trump’s decision to slap stiff tariffs on European steel and aluminum exports.
Global markets on Friday took the development in stride, with stocks in Europe firm after weeks of instability on trade worries.
EU Trade Commissioner Cecilia Malmstrom said this week that the 28-nation bloc was “left with no other choice” but to impose tariffs of its own after the “unilateral and unjustified decision of the US.”
Together with US tariffs against Mexico and Canada, the trade battles have raised the spectre of a global trade war, spooking financial markets that fear major consequences to the global economy.
“We have a trade war — and it’s an escalating trade war,” SEB chief economist Robert Bergqvist said in an interview.
Brussels first drew up the list in March when Trump initially floated the 25 percent tariffs on steel imports and 10 percent on aluminum, which also target Canada, Mexico and other close allies.
The list does not specifically name brands but European Commission chief Jean-Claude Juncker spelled out in March that the bloc would target “Harley-Davidson, bourbon and Levi’s jeans.”
Cranberries, cranberry juice, orange juice, sweetcorn and peanut butter are among the other food products targeted.
Juncker said on Thursday that the US decision to impose tariffs “goes against all logic and history.”
“Our response must be clear but measured. We will do what we have to do to rebalance and safeguard,” he said.
European consumers would be able to find “alternatives,” European Commission Vice President for trade Jyrki Katainen said.
“If we chose products like Harley Davidson, peanut butter and bourbon, it’s because there are alternatives on the market. We don’t want to do anything that would harm consumers,” he said on Thursday.
“What’s more, these products will have a strong symbolic political impact.”
International Monetary Fund (IMF) chief Christine Lagarde warned on Thursday that trade war, as well as Brexit, were the key risks to the eurozone economy.
While she didn’t see a serious “direct impact of tariff increases... it’s a trend that is worrying, the breach of confidence that undermines confidence,” she said on the sidelines of eurozone minister talks in Luxembourg.
Transatlantic ties are at their lowest level for many years due to rows over a host of issues including the Paris climate agreement and the Iran nuclear deal.
Relations plumbed new depths at the recent G7 summit when Trump abruptly rejected the joint statement and bitterly insulted his Canadian host, Prime Minister Justin Trudeau.
Trump claimed America had been obliged to levy the metals tariffs as it has been exploited as the world’s “piggy bank.” He is also targeting EU auto imports with a US probe now underway.
Trump’s outbursts were the latest in which he has clashed with America’s closest allies, even as he has had warm words for autocrats like North Korean leader Kim Jong Un, with whom he had a historic meeting earlier this month, and Russia’s Vladimir Putin.
But US Assistant Secretary of State for European and Eurasian affairs Wess Mitchell said on Thursday that Trump’s approach toward his allies was about “strategic renovation.”
“Strengthening the West means making hard decisions today when we initially disagree, rather than continuing to accept the appearance of transatlantic unity,” he told the Carnegie Europe think-tank in Brussels.