BNCM Leads the New Chemical Material Sector

Excellent performance: becoming a leading goat in the sector

The 2005 performance statement of Bluestar New Chemical
Materials Co., Ltd. (BNCM SH: 600299), a publicly traded company
controlled by ChemChina, showed that the sales revenue
accomplished by the company in 2005 was RMB2.489 billion, an
increase of 32.42% over 2004. The total profit was RMB216 million,
an increase of 116.47%. In various products covered by the
company, almost all major competitors are countries with strong
economy in the world. Some domestic late comers have also
participated in the price competition. Nevertheless, BNCM still
holds the leading position in terms of sophisticated
technologies in product development.
   Compared with 2004, the net assets of BNCM increased
considerably in 2005. The total asset value was close to RMB4.0
billion. The sales revenue was close to RMB2.5 billion as
compared to RMB1.8 billion in 2004. The strict auditing proved
that the net profit was RMB216 million whereas it was RMB90
million in 2004. The earning per-share also reached RMB0.90 in
2005.
   The supply deficit of energies, in particular crude oil and
coal, greatly affected the new chemical material sector in 2005,
and caused drastic price fluctuations. The cropping up of more
competitors at home and abroad also made competition tenser.

Remarkable advantage: creating four major industrial platforms

The main business of BNCM is developing around four industrial
platforms in the new chemical material sector. Relying on its
own scale advantage, the company has made great efforts to
improve overall economic performance and functioning quality
and accelerate the development of related downstream sectors.
   The vigorous development of the new material industry is also
an important component of the Eleventh Five-year Program
(2006-2010) in China. Data show that new chemical materials as
one of the three key materials are regarded by various countries
as an important means to enhance competitive edge and promote
economic growth.
   The four major product series of BNCM include silicone
product series, phenol, acetone, bisphenol A, epoxy resin and
in-depth processed product series, PBT (polybutylene
terephthalate) synthetic resin and engineering plastic modified
product series and color imaging agent product series.
   The output of silicone monomer in the company was 74 000 tons
in 2005. The capacity of silicone synthesis units also increased
to 100 000 t/a after technical renovation. With the completion
of the new unit in October 2006, the capacity of silicone in the
company will reach 200 000 t/a.
   Besides silicone, another important industrial platform is
the epoxy resin and bisphenol A production base in Wuxi of
Jiangsu province. The capacity of epoxy resin is 23 000 t/a and
the capacity of bisphenol A is 45 000 t/a. The production of epoxy
resin falls far short of the domestic market demand. Major
bisphenol A producers in China include BNCM and Tianjin Shuangfu
Group.
   The third industrial platform of the company is synthetic
resin and engineering plastic modified product series such as
PPE and PBT. PPE (polyphenyl ether) is one of the five main
engineering plastics in the world. The capacity of PBT in BNCM
is 15 000 t/a today. Adopting world advanced technologies, a 60
000 t/a PBT production line is under construction in Nantong of
Jiangsu province.
   The fourth industrial platform of the company is a
photosensitive material production base in Nantong. It is also
one of the major photosensitive material suppliers in the world.
The company has already acquired a capacity of 800 t/a. Not only
the domestic demand can be satisfied, remarkable economic
benefits can also be produced for the company itself.

Technical progress: promoting future sustained development

BNCM as a high-tech firm emphasizes technical progress
throughout its development course. It is because the "soul" for
the development is firmly grasped that the company can keep hold
of the leading position and pave a sound foundation for its
future sustainable development. As the company highlights
all-round cooperation, the scope of cooperation in high-end
products has been gradually enlarged. Quite a few products in
the company already got technology patents.
   BNCM persists in pursuing technical progress. After the
digestion and assimilation of foreign new technologies and the
constant research and improvement of new processes,
eye-catching innovations have been made in production processes
and equipment of upstream products. Technical renovation also
made big strides in 2005. The capacity of silicone monomer has
increased from 70 000 t/a to 100 000 t/a, being the largest in
China today. There are also more product varieties and the
product distribution has become more rational. Technical
progress helped the company keep its leading position in the new
material sector and the chemical sector.
   BNCM is also actively conducting technical cooperation with
foreign large firms. It signed a letter of intent with Cabot of
the United States in 2002 on the joint construction of a
vapor-phase silica project. Cabot Bluestar Chemical (Jiangxi)
Co., Ltd. was established in February 2004. The project started
production and is in smooth operation today.