Plastic prices in the Kingdom have fallen by 50 percent following the global economic crisis in general and as a result of the steep slide in oil prices in particular. According to Saudi market experts, the local industry is affected by the world crisis only in a limited manner. They believe that situation may lead to the factory owners to form alliances and mergers in a bid to become strong corporate entities.
The source also believed that the falling level of prices would prompt the Saudi industry to play a larger role in foreign markets as a number of plastic companies in the United States, Europe and China have been closed for lack of funding from banks. The source said that last year the exports had registered a 40 percent increase.
“Sixty percent of the product is consumed locally and only 40 percent is available for export,” he said. However the source did not rule out the possibility of some companies suffering heavy losses and eventual lay-off or closure following the fall in prices. “This is because some companies bought large stocks of raw materials at a time when the petroleum prices were very high and now they cannot cope with current low prices,” he said.
“Low prices are in a way good for the Saudi manufacturers because the falling prices would stop the efforts by some countries to find substitutes to plastic and ways to manage without plastic,” he said.
There are 759 plastic factories in the Kingdom with a total investment of SR136 billion employing 78,600 people, the source said.