A well-established Industry that is expected to double in size with the 2030 Vision due to the increasing demand for basic, Fine and specialty chemicals. Furthermore, the diversification of KSA’s economy represent key component driving this market forward. Production capacities are growing as is the percentage of the Kingdom’s share in the global chemicals market (5th largest chemical production market in the world). In 2016, investments in the sector were 40% higher than any other global market, amounting to SAR 3.75 billion (US $1 billion), boosting production capacity grow by 6% (Projected gross output in 2022 to reach $Billion 92).
Saudi Arabia is the global production leader of several key products, including Ethylene, Glycol, Polyethylene and Methyl tert –butyl Ether (MYBE). Furthermore, Saudi Arabia is one of the most cost-efficient places in the world to produce Ethylene, assisting the Kingdom to take a 10% share of total global production.
The Kingdom also benefits from abundant access to raw materials at low cost and a high standards of infrastructure & Logistics network (Largest marine Network in the region) that is continuously being improved to serve the increasing demands of Africa, Europe and Asia. Costs are favorable due to low feedstock prices, low utility expenses and customs duty exemptions.
Saudi Arabia is strategically located at the crossroads of Asia, Europe and Africa, all with a high demand for chemical products. The Asian market size is currently SAR 6.75 trillion (US $1.8 trillion) per year and is expected to grow at rate of 8% annually. European demand currently sits at SAR 2.8 trillion (US $750 billion per year) and is expected to grow at a rate of 4% annually. Whilst in Africa, the market size is valued at SAR 187.5 billion (US $50 billion) and is also expected to increase at 4% annually.
Fully developed ecosystem
Saudi Arabia has established a solid ecosystem for the chemicals sector in the city of Jubail, which is the largest industrial city in the Middle East. The Royal Commission for Jubail and Yanbu is responsible for supporting KSA’s chemicals sector through several initiatives.
Demand is expected to grow because of the growth in multiple sectors highly depending on chemicals such as:
Reasons to invest in the Chemicals sector in KSA:
- The presence of game-changing enablers and programs in the market.
- Low production cost.
- Availability of human capital & research capabilities in addition to on-the-job-training and financial support for professional certification seekers (Tamheer, HRDF, Professional Career Certificates).
- The presence of developed industrial cities such as the Royal commission for Jubail & Yanbu, Saudi Industrial Property Authority (Including 35 Industrial cities) and King Abdullah Economic City (KAEC).
- The availability of the right financial support such as:
– Export credit financing guarantee and insurance.
– Customs duty exemption.
– Customs duty drawback.
– Loan program for industrial projects.
[source: “Saudi General investment Authority” data]