Mideast’s top petchems producer SABIC says global supply faces ‘obstacles’

Global petrochemicals demand is “healthy” but supply faces challenges from tougher environmental scrutiny and stricter carbon emissions regulations, according to Abdulrahman Al-Fageeh, executive vice president of petrochemicals for Saudi Basic Industries Corp., or SABIC.

“We have seen healthy demand in the petrochemicals, while the supply is not clear yet,” Fageeh said in an interview with S&P Global Platts in Dubai on Dec. 7. “There are a lot of challenges on the supply side, especially from the environmental regulations that are being put in place, and from the carbon neutrality also. There are so many obstacles to continue the same rhythm of the supply.”

He added that SABIC is closely adhering to all regulations governing emissions and the environment.

While the industry faces supply chain issues mostly tied to shipping, SABIC is still plowing ahead with new projects, including a 700,000 mt/yr mono-ethylene glycol plant in start-up mode in Jubail, Saudi Arabia; a polycarbonate joint venture with Sinopec in Tianjan, China; and the world’s largest ethylene cracker project with ExxonMobil near Corpus Christi, Texas, he said.

Demand for petrochemicals from the automotive industry has been in a slump for the past two years while health care and packaging applications are growing even during the pandemic, Fageeh said. SABIC — which is also involved in steel, chemicals and agriculture — does not provide a breakdown of petrochemicals sales by volume on a quarterly basis.

Petrochemicals markets in the US show more supply than demand, while Europe is more in balance and the Middle East remains a exporter, Fageeh said. In China, the supply demand balance is more unclear because of environmental regulations being put in place, he said.

Supply chain issues include a shortage of containers and inefficiencies at ports, including a lack of drivers worldwide, he said.

“There are so many key ports that were less efficient during this pandemic,” he said.

SABIC has managed to control the issues for its customers by contracting out for charters, sometimes even on a spot basis, and taking advantage of its operations hubs in Shanghai, Houston, Singapore and cities in Europe, Fageeh said.

“We are global in the way we operate our supply chain, we have so many different providers,” he said. “The hubs help us optimize our operations.”

SABIC also has a long history in carbon capture, with its plant located in Jubail having collected 500 mt/year of C02 after coming stream in 2015.
Source: Platts