SABIC sanctions USD6.4B China petchem complex investment

Global chemical group SABIC, based in Riyadh, Saudi Arabia, has formally approved USD6.4 billion in capital commitments towards a new integrated petrochemical facility within China’s Fujian province through a 51-49 joint venture with local partner Fujian Fuhua Gulei Petrochemical.

SABIC executives announced final investment decision activation for the 1.8 million tonnes per annum ethylene complex that targets a 2026 operational launch. The Saudi firm labeled its largest-ever foreign direct project in China an essential plank enabling feedstock diversification and wider Asian manufacturing presence.

In a statement, CEO Abdulrahman Al-Fageeh said the plant construction will expand supply solutions for regional customers while maximising shareholder value. He said planned output across polyethylene, polypropylene and other core plastics meets evolving demand for specialised material applications from electronics to automotive and healthcare.

Al-Fageeh added that the project’s realisation further signifies commitments within Saudi Arabia’s Vision 2030 blueprint around industrial growth during ongoing economic diversification efforts. The initiative identified chemical sector localisation, exports and downstream facility investment as pivotal targets.

The approved Fujian complex incorporates nine different SABIC-developed technologies aligned to higher-value chemical specialties required by rising consumer and industrial sophistication trends regionwide. Adjacent infrastructures offer logistics advantages importing raw materials from the firm’s joint venture refining project guarantees.

Analysts noted SABIC continues pivoting from commoditised petrochemical categories exposed to macroeconomic volatility towards more durable specialty chemicals reporting steadier annual growth of around 7%. The strategy also plays on global movements encouraging plastic waste reductions and recycling favouring recyclable materials.

Investment bank Al Rajhi Capital forecasted the joint venture enhances Asian exposure while balancing feedstock flexibility against climate policy shifts. But it warned that realised returns depend on plant utilisation rates which are vulnerable to potential local overcapacity and chemical demand swings.

Other observers highlighted SABIC’s willingness to engage foreign partnerships compared to domestic peers as geopolitical equations evolve. Ties to major oil and gas reserve holders aid feedstock access while market-specific collaborations smooth operational launches. They assist in tackling competitive, regulatory and cultural intricacies international firms can struggle to penetrate independently.