Saudi petrochemicals firm Yansab expects to start making profits in 2010, less than two years after it starts production, the company’s CEO Mutlaq al-Morished has said.

Shares in Yanbu National Petrochemicals Company (Yansab) soared on their trade debut recently by up to 1,400 per cent after a $525 million IPO in December was nearly twice oversubscribed.
Yansab, 65-percent owned by Saudi Basic Industries Corporation (Sabic), is investing $5 billion to produce 4 tonnes of petrochemical products a year, Morished told Reuters. Production is due to start by the second quarter of 2008.
“Yansab has a bright future. Costs related to investment, raw materials and to building up inventories are huge. So we expect the first net profits to emerge in 2010,” he said in a telephone interview.
He declined to provide forecasts for the company’s turnover and net margin. “Everything is progressing as scheduled, including construction and technical contracts,” he said.
The company will sell its products in Sabic’s traditional markets of Europe and the Far East, and will also seek to conquer new markets, he added.
“We have already started pre-marketing to sell Yansab’s output which will include new products such as bi-modal,” he said. Bi-modal high-density polyehtylene is widely used in the production of pipes. Yansab will also produce ethylene, propylene, polyethylene and glycol.
Asked to comment on the rocketing debut of the stock, Morished said: “The market decides the price.”
More than eight million Saudis subscribed in Sabic’s offering of 35 per cent in Yansab. The booming bourse is craving fresh listings to soak up liquidity.
The debut caused early-morning traffic jams as Saudis rushed to banks and tents raised specially for the day to sell their shares, confident of making instant profits.
Yansab, which has a paid-up capital of 5.625 billion riyals ($1.5 billion), signed last year deals with oil services company Technip to design and build an ethylene plant and with Japan’s Toyo Engineering Corp to design and build a glycol ethylene unit.
Sabic will keep a 55 per cent stake in Yansab and offer the remaining 10 per cent to partners in two of its subsidiary companies, Ibn Rushd and Taif.
Sabic is the Middle East’s largest non-oil company. Yansab is part of the company’s plans to invest $20 billion in the next three years to expand output to 64 million tonnes a year by 2008 from 47 million tonnes now.