Margin Narrowed     

April is the most suitable month for holding an exhibition. Three important chemical exhibitions - The 8th China International Dye Industry, Pigments and Textile Chemicals Exhibition (China Interdye 2008); the 22nd International Exhibition on Plastics and Rubber Industries (Chinaplas 2008); and the 9th China International Chemical Industry Fair (ICIF China 2008) - were held in Shanghai April 15th - 17th, April 16th - 18th and April 23rd - 25th respectively. Many foreign chemical firms paid much attention to these opportunities in order to show their new products, new innovative technologies and new plans here, signifying that they are confident of China's economic future.
   There were joy and worry for China's petroleum and chemical industry in the first quarter, according to a report from China Petroleum and Chemical Industry Association (CPCIA). The joy was that the growth of production in the industry slowed down under the control of the government. The worry was that surging raw materials costs drove the production gross up faster than expected and the profit margin narrowed further, particularly in the refining industry. In addition, investment continued its fast growth, both imports and exports increased steadily at a lower growth rate. The sale/production rate is 97.93%, CPCIA reported. It also predicts that chemical prices will continue to go up.
   In the first quarter the petroleum and chemical industry produced a value of RMB1457.16 billion, up 30.7% year on year, the growth is 9 percentage points higher compared with the same period of 2007, 2.4 percentage points higher than that of the national total production in the same period this year. The price growth contributed more than the output did, analyzed by CPCIA. Total profits declined by 6.12% in the first two months; such a decline has rarely taken place in this industry. In addition to losses in the refining segment, which suffered loss because of national policy, the synthetic resin and organic chemical feedstock manufacturing segments also suffered shrinking margins due to slack in the cost shifting chain.   
   In April the Guangzhou Branch of Procter & Gamble announced it has put a plan into action for its Chinese staff to hold shares in the company. Nearly 7 000 P & G employees working in China now have the option to purchase and hold shares of Procter & Gamble in order to share in the growing profit of the company. Procter & Gamble is the first foreign company that was approved by China's administrative departments of foreign exchange for selling its shares to Chinese employees.

Zhong Weike
April 29th, 2008