The Saudi petrochemical giant SABIC announced a significant strategic pivot yesterday, agreeing to sell its European engineering thermoplastics business to American company Celanese Corporation for a value still undisclosed. The deal includes SABIC’s engineering thermoplastic (ETP) operations across Europe and the Americas, marking a substantial restructuring of the company’s global portfolio.
According to SABIC’s statement, this divestment will be executed in phases, with completion expected by 2025. The Saudi Basic Industries Corporation, majority-owned by state oil company Saudi Aramco, described this move as part of a broader strategy to streamline operations and focus on core business segments.
“This is a substantial reorganization of SABIC’s global footprint,” noted Peter Huntsman, CEO of competing chemical manufacturer Huntsman Corporation, in an interview with Reuters. “It signals a significant shift in how Middle Eastern petrochemical companies are approaching Western markets amid evolving economic conditions.”
Industry analysts at Goldman Sachs interpret this move as evidence of SABIC’s strategic recalibration toward higher-growth markets in Asia and the Middle East. The firm’s latest sector report points out that engineering thermoplastics face intensifying competition in mature European markets, with margins under pressure from rising energy costs and regulatory constraints.
The transaction includes manufacturing facilities in the Netherlands, Spain, and the United States, according to people familiar with the matter. These operations primarily produce specialized polymer materials used in automotive components, electronic devices, and industrial applications – markets that have experienced volatility since the pandemic disrupted global supply chains.
Federal Reserve economic data shows that chemical manufacturing in Western economies has struggled to regain momentum post-pandemic, with production indices remaining below 2019 levels through most of 2023. This contrasts sharply with Asia-Pacific markets, where chemical demand has rebounded more robustly, particularly in China and Southeast Asian economies.
SABIC’s ETP business generated approximately $2.1 billion in annual revenue, representing roughly 5% of the company’s global sales, according to its most recent financial disclosures. The business employs over 1,800 people across its European and American operations.
For Celanese, the acquisition strengthens its position in the engineering materials market. The Texas-based specialty materials company has been aggressively expanding its thermoplastics portfolio through strategic acquisitions, having previously purchased DuPont’s mobility and materials business in 2022 for $11 billion.
“This transaction is transformative for both companies,” explained James Wilson, senior chemicals analyst at BMO Capital Markets. “Celanese gains immediate scale in key European markets, while SABIC can redeploy capital toward higher-growth opportunities aligned with Saudi Vision 2030 objectives.”
Saudi Vision 2030, the kingdom’s economic diversification plan, has emphasized developing domestic manufacturing capabilities and reducing dependence on crude oil exports. Recent data from the Saudi General Authority for Statistics shows the non-oil private sector growing at 3.7% in the third quarter of 2023, outpacing the overall economy.
The International Monetary Fund’s regional economic outlook suggests this strategic pivot aligns with broader trends among Gulf Cooperation Council nations, which are increasingly focusing investment on domestic industrialization rather than international asset acquisition.
For European chemical workers, this transition creates uncertainty. Chemical industry employment in the EU has declined by approximately 7% since 2018, according to Eurostat data, with higher energy costs and environmental regulations cited as key factors eroding competitiveness against Asian and Middle Eastern producers.
Trade unions representing workers at SABIC’s Bergen op Zoom facility in the Netherlands have expressed concerns about potential job losses following the ownership change. Similar concerns have emerged at the company’s La Porte, Texas, operations, where approximately 300 employees will be affected by the transition.
The divestment comes amid broader restructuring in the global petrochemicals industry, driven by volatile energy prices, shifting demand patterns, and intensifying competition. The American Chemistry Council’s latest industry outlook highlights overcapacity in certain chemical segments, particularly as Chinese producers have expanded production capabilities.
SABIC has neither confirmed nor denied whether this transaction represents the beginning of a larger withdrawal from Western markets. However, industry observers note the company has been gradually shifting investment focus toward Saudi Arabia and strategic Asian markets like China and India over the past five years.
The company’s third-quarter financial results, released in October, showed a 17% decline in quarterly net profit compared to the previous year, highlighting the challenging market conditions facing petrochemical producers globally.
Financial markets responded neutrally to the announcement, with SABIC shares on the Saudi Tadawul exchange closing relatively flat. Celanese stock saw modest gains of 2.3% on the New York Stock Exchange following the news.
As this transaction progresses toward completion in 2025, both companies face the complex task of ensuring business continuity while managing the transition. For SABIC, this represents a significant milestone in its evolution from a global diversified chemicals manufacturer toward a more focused, regionally-oriented powerhouse aligned with Saudi national economic priorities.
