Sico launches new publication -"Petrochemicals round up"

The region's access to the world's largest oil and gas reserves is fuelling investment in the regional petrochemical sector, with announced projects estimated at over $110bn.

As a result the region is expected to reinforce its position as key player in the industry.

Regional producers are expected to account for 16% of the world's ethylene production capacity by 2012, a basic petrochemical feedstock, from about 9% in 2007.

Petrochemical sector companies account for about 15% of the total market capitalization of the GCC, and play a pivotal role in the region's growth both directly and indirectly by contributing to growth of related sectors such as infrastructure, transportation etc.

Sico believes that its new product will provide investors a tool to understand sector dynamics and making better informed investment decisions.

In Sico's view, regular and informed access to underlying commodity price benchmarks is vital for investors in a cyclical industry, such as petrochemicals, to gauge earnings impact, and accordingly develop better insights about investing in this dynamic sector.

This Bi-monthly product will be published every 2nd and 4th Sunday of the month, and will also cover major developments in the global petrochemicals and metals industry during the previous two weeks.

The report also intends to analyze the impact of global news flow on the GCC Petrochemical and Refining companies.

Additionally the report provides margin trend analysis of major commodities (petrochemicals and fertilizers) produced by GCC producers.

The analysis is based on global benchmark commodity prices, assisting in understanding the margin impact for local petrochemical companies, which enjoy availability of cheap raw materials (feedstock).

Most of GCC based petrochemical producers receive gas at prices between $0.75/MMBtu to $1.5/MMBtu versus global prices of over $6/MMBtu, with this advantage resulting in the region's increasing importance in the global petrochemical industry.

Over 70% of production costs globally is attributed to the raw material (feedstock) cost, with the availability of cheap feedstock providing an unparalleled advantage to GCC based producers.

The "Project Monitor" section of the report will update investors on the status of various major announced petrochemical projects in the GCC region, helping them to track the progress in different projects, and accordingly look for the major earnings' triggers for the companies.

The publication also incorporates stock performance of the GCC petrochemicals, and their "Relative Value" in comparison to their global peers.

Sico believes that this will provide insights on how GCC producers are positioned in terms of various valuation parameters in the global industry.