Two affiliates of Saudi Basic Industries Corp (Sabic) have cancelled a plan to build a steel plant in Jubail Industrial City after feasibility studies were 'not encouraging.'    

One of the affiliates, Saudi Arabian Fertilizers Co (Safco) , said instead it will study the potential for a 1 million tonne urea factory in Jubail with the aim of starting production by the second half of 2013.

Sacfo, which is 42.9 percent owned by chemical maker Sabic, and Sabic's steel unit Hadeed agreed in 2008 to build the Jubail steel plant with an annual capacity of 1.7 million metric tonnes.

'Safco announces that it has been decided not to proceed with the implementation of this agreement since the results of the final studies were not encouraging,' the firm said in a  statement to the bourse on Monday.

'Alternatively, Safco will carry out feasibility studies for the construction of a new plant (Safco 5) in its complex in Jubail, for the production of urea with an annual capacity of 1 million tonnes,' it said.

Safco said on Sunday its net profit nearly tripled in the fourth quarter buoyed by higher prices. - Reuters