Sabic remains on expansion course

* username: rupertbu

It is an ill wind that blows no good. While petrochemical rivals such as BASF and Dow Chemical had to grapple with rising raw material costs last year, subsidised feedstock meant higher profits and increased market share for Saudi Basic Industries Corporation, the Gulf's largest listed company.

As a 70 per cent state-owned company, Sabic obtains its gas at 75 cents per million British thermal units, compared with a global average of $6.50. This enables the company's ethane-based crackers to produce ethylene, for example, at $110 a tonne, while actual production costs can reach up to $900 a ton.

Sabic also enjoys discounted prices for other feedstock such as propane and butane, says Ahmed Shams el-Din, senior equity analyst at EFG-Hermes, a regional investment bank.