Saudi Arabia’s Basic Industries Corporation (SABIC), a Saudi Arabian-controlled petrochemical manufacturing company, has announced that its five ethylene resin-producing plants have received compliance certificates from the Bureau of Indian Standard (BIS). As a result, all orders placed on SABIC Asia Pacific Pte Ltd, an affiliate of SABIC, for the supply of low-density polyethylene (LDPE), linear low-density polyethylene (LLDPE), high-density polyethylene (HDPE) to India shall bear the relevant license number starting from September 1, 2023.
In a letter addressed to its Indian customers, Dhaval Shah, Senior Manager of Distribution (Rest of Asia) at SABIC Asia Pacific Pte Ltd, stated, “SABIC values your business association and is committed to upholding high standards of quality as a responsible supplier. We are pleased to inform you that SABIC’s five manufacturing plants supplying polyethylene (PE) for moulding and extrusion to India are now BIS certified. Therefore, effective September 1, 2023, all orders placed with SABIC Asia Pacific Pte Ltd for supplies to India will include the ISI (Indian Standards Institution) Mark and the corresponding license number affixed on each bag containing PE resin from our certified plants.”
The five BIS-compliant plants include Arabian Petrochemical Company Petrokemya Al-Jubail Complex, Yanbu National Petrochemical Company (Yansab), Saudi Yanbu Petrochemicals Co (Yanpet), Eastern Petrochemical Company (Sharq), and Saudi Kayan Petrochemical Company (Saudi Kayan).
| SABIC’s handling of annual product volume (million tonnes) | ||||||
| Particulars | Calendar year 2021 | Calendar year 2022 | Change (%) | |||
| Production | Sales | Production | Sales | Production | Sales | |
| Petrochemicals and specialties | 45.9 | 37.2 | 47.9 | 40.0 | 4 | 7 |
| Agri-nutrients | 7.6 | 6.2 | 8.3 | 6.7 | 9 | 9 |
| Hadeed | 4.6 | 4.4 | 5.2 | 5.2 | 12 | 19 |
| Consolidated | 58.2 | 47.8 | 61.4 | 51.9 | 6 | 9 |
Implementation extensions
Founded in 1976, SABIC is a publicly traded company based in Riyadh, Saudi Arabia, and is ranked among the world’s largest petrochemical manufacturers. According to the company website, 70 percent of its shares are owned by Saudi Aramco while the remaining 30 percent are publicly held. The company operates in approximately 50 countries around the world and boasts 65 world-class manufacturing and compounding plants across the Middle East, Asia, Europe, and the Americas. However, the company has not provided any information regarding whether the cost of PE resin will increase after obtaining the BIS certification.
In fact, under the auspices of the government of India, the BIS introduced quality control norms for polyethylene for the first time in early 2021, initially for a period of six months. The implementation of this notification, however, has been repeatedly extended to six-month intervals. Currently, it has been extended four times, with the current norms set to expire on October 1, 2023. Similar notifications were also issued for polypropylene (PP) and polyvinyl chloride (PVC), with their deadlines extended by another six months, until February 2024. Traders are hopeful that the implementation deadline for the quality norms for PE will also be extended for another six months.
“The plastic upstream and downstream industries were severely affected by the spread of the coronavirus (COVID-19) and its subsequent waves during the calendar years 2020 and 2021. These two years witnessed a significant blow to the global economy, and the entire plastic value chain, from raw materials to finished products, was no exception. Consequently, the Indian government’s decision to mandate BIS certification for trading was premature,” said a senior official from a prominent plastic products manufacturing company.
Reports indicate that other producers in the Middle East, Northeast Asia (excluding China), and Southeast Asia have also obtained BIS certification. However, some producers are still awaiting the final audit check reports, which were recently completed. They are expected to obtain BIS certification in September. With this development, nearly all primary clients of SABIC are anticipated to secure BIS licenses within the next few months.
Industry concerns
Traders were initially displeased with the requirement and implementation of a distinct BIS quality standard, especially given that global players like SABIC adhere to stringent quality regulations in developed regions such as the United States and the European Union. Other producers in developed countries expressed concerns about the scrutiny of their plants and products, fearing potential breaches of their intellectual property rights (IPRs).
However, industry leaders like SABIC view India as a promising and expansive market for the future, which is why they pursued BIS certification. This move is likely to motivate other international suppliers to also seek BIS licenses for exporting PE to India in the future, according to an importer. Meanwhile, India’s Ministry of Chemicals and Petrochemicals has already coordinated third-party inspections, facilitating visits and ensuring necessary assessments at manufacturing locations sites across the globe.
Certain global suppliers also raised objections to the separate requirements of imprinting the ISI Mark alongside the BIS logo on bags designated for exports to India. All these concerns voiced by global PE manufacturers have been resolved to facilitate a smooth transition from non-BIS Mark compliance to embracing the quality standards represented by the ISI logo.
A true global leader
With Saudi Aramco’s acquisition of a 70 percent stake in SABIC in June 2020, SABIC is now positioned as Saudi Aramco’s chemical arm and a leader in the global chemical industry. Collaborative efforts with Saudi Aramco in the realm of petrochemicals have already been fortified, capitalizing on strong customer relationships, market positions, and an appealing product portfolio to cater to the growth markets of China, India, Southeast Asia, and North America.
These markets will be served through a variety of feedstock asset platforms and associated investment models. Primarily situated in Asia, Saudi Arabia, and North America, these growth platforms will be empowered by a combination of competitive advantages originating from both Saudi Aramco and SABIC. These advantages encompass favourable and abundant feedstock, integration of refinery petrochemicals, cutting-edge technology, such as crude oil-to-chemicals (O2C) project, and robust strategic partnerships where applicable.
The industry is facing mounting pressure to take substantial measures against plastic waste, repurpose waste as feedstock, and earnestly mitigate the release of greenhouse gases during manufacturing processes. In the forthcoming years, SABIC envisions that sustainability will assume an even more central role in the strategic direction, striking a balance between business expansion and the trajectory toward carbon neutrality and a circular economy.
Source: Polymerupdate News