Saudi Basic Industries Corporation expects higher steel prices and new petrochemical units to deliver Q2 net profit above the USD 1.45 billion it made in the Q1.

The world's biggest chemical firm by market value saw net profit during the Q1 rise 19% from the Q4 of 2009.

Mr Mohamed Al Mady CEO of SABIC said that “All indicators show that growth will continue, although at a slower pace.”

Earlier this year, the company started units at both the 4 million tonne per year Yanbu National Petrochemicals Company and at the expanded Jubail's Eastern Petrochemical Company and will soon start commercial operations at the 3.2 million tonne per year Tianjin complex in China a joint venture with Sinopec.

Mr Al Mady said that 'Predicting prices is tough under the current conditions. Prices of some petrochemical products started contracting and there are new capacities entering the international market. We will play on quantities to help our revenues grow.

He said that SABIC turnover rose to SAR 34 billion in the Q1 up from SAR 19.6 billion per year earlier and SAR 32 billion in the Q4 of 2009. What helped SABIC during the Q1 was an improvement in US demand and sustained solid demand from China. The automotive business improved dramatically electronics as well.

Saudi Fertilizers Company in which SABIC holds a nearly 43% stake has put on hold a fifth expansion program to add 2.7 million tonnes of urea and ammonia per year at a cost of USD 500 million and which was set to start in 2011.

Mr Al Mady said that the focus now is on Safco's JV with Hadeed for the flat steel products plant. It's a promising plan. He was referring to a 1.7 million tonne per year plant that is jointly owned by SABIC two affiliates. Hadeed is the steel subsidiary of state controlled SABIC which covers about 62% of the kingdom's steel demand.

(Sourced from Reuters)