Saudi Basic Industries Corp (SABIC) , the world's largest chemicals producer by market value, said on Tuesday that it is planning a $1bn-plus facility in China with China Petroleum & Chemical Corp (Sinopec) to tap the country's robust demand for plastics.
The project in the eastern port city of Tianjin would have an annual capacity of 260,000 tonnes of polycarbonate and require total investment of more than $1bn from SABIC's existing 50/50 venture with Sinopec in Tianjin, said SABIC CEO Mohamed Al Mady.
Polycarbonate is a essential plastic used to produce a variety of consumer products and industrial components including automotive parts and compact discs.
"This is a major step for us to continue our leadership position in China in the plastics area," Al Mady told a news conference in the southern Chinese city of Guangzhou. "The project will drive local economic development, satisfy growing demand for polycarbonate in Asia-Pacific and is of significant importance to the Chinese petrochemical industry and local industry in Tianjin."
Petrochemical demand should grow by an annual 20 percent for the next ten years in China, the world's second-largest economy, he said.
SABIC's Tianjin joint venture with Sinopec, which started operation in 2010, produces various petrochemical products, including ethylene, polyethylene, ethylene glycol and polypropylene.
The polycarbonate project, for which a memorandum of understanding had been signed by SABIC and Sinopec, was expected to be operational by 2015, SABIC said.
SABIC, 70 percent owned by the government of Saudi Arabia, makes chemicals, fertilisers, plastics and metals used in paint, rubber, textiles, leather, cleaning products, glass, food and other consumer industries.
SABIC also said it was strengthening its presence in the region by investing in two technology and innovation centres in China and India, both expected to be operational by 2013.
The China centre, in Shanghai, would have 550 staff and would also serve as the headquarters for SABIC's Greater China operations, it said.
In January, SABIC said it expected higher sales and profitability this year and throughout 2012 as petrochemical prices return to pre-crisis levels and further output capacity is added.
The company, a yardstick for Dow Chemical Co and Germany's BASF SE , gave the upbeat outlook after broadly meeting analysts forecasts with a 27 percent increase in net profit.
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