Economic Functioning of Petroleum/Chemical Industry in H1   

By Feng Shiliang  CPCIA    

According to China Petroleum and Chemical Industry Association (CPCIA), China met with disasters in 2008, such as the snow-storm in the southern China, the Wenchuan earthquake in Sichuan province and the rainfalls and floods in the southern China, but China's petroleum/chemical industry saw a stable growth in the first half of 2008.
   The petroleum/chemical production has maintained a rapid growth, but the economic performance growth is evidently weakened. In the first half of 2008, the total production value of the petroleum/chemical industry was RMB3.07 trillion, a year-on-year increase of 30.2%, showing 9.0 percentage points higher; the sales value was RMB3.02 trillion, a year-on-year increase of 30.6%; and the sales / product rate was 98.4%, being 0.26 percentage points higher. The main-business revenue was RMB3.1 trillion, a year-on-year increase of 30%, representing 8.5 percentage points higher. The total profit was RMB279.0 billion, a year-on-year increase of 2.5%, indicating down 24.9 percentage points.
   The output of major products showed a stable growth as a whole. In the first half of 2008 the output of crude oil was 94.326 million tons, up 1.7% year-on-year. The output of natural gas was 43.02 billion m3, up 17.3% year-on-year. China processed 169.563 million tons of crude oil, up 5.2% year-on-year. The output of oil products was 101.733 million tons, an increase of 6.7%. The output of ethylene was 5.359 million tons, an increase of 2.1%. The output of methanol was 5.411 million tons, an increase of 21.1%. The output of synthetic resins was 16.137 million tons, an increase of 7.0%. The output of chemical fertilizers was 30.015 million tons, an increase of 5.9%. The output of pesticides was 1.011 million tons, an increase of 20.8%. The output of caustic soda was 9.893 million tons, an increase of 12.8%. The output of soda ash was 9.674 million tons, an increase of 15.4%. The output of tires was 280 million pieces, an increase of 12.8%.
   The petroleum and chemical industry of China is facing with challenges. (1) The global surging oil price has led to a cost increase. Refineries have suffered a huge loss. The total loss for chemical fertilizer enterprises those suffered losses in the first half of 2008 was 43.3% higher than the same period of 2007. The loss for synthetic resin enterprises those suffered losses was 163.5% higher. (2) The profit-earning ability is weakened. The drastic price rise of raw materials caused by the high oil price has resulted in a weakening profit-earning ability. The profit/cost rate in the petroleum/chemical industry was 9.97% in the first half of 2008, down 3.4 percentage points year-on-year. The profit/sales rate was 8.94%, being 2.72 percentage points lower. The profit/asset rate was 5.18%, lowering 1.15 percentage points, in which the asset return rate was negative 7.85% for the refining sector and negative 0.45% for the synthetic fiber monomer/polymer sector.
   CPCIA forecasts that the price of crude oil and oil products will further increase in the second half of 2008 and maintain at a high level. The price of chemical fertilizers will tend to be stable. The price of synthetic resins will be stable and show a drop. The price of rubber products will be kept stable. The price of soda ash and caustic soda will be stable and slighter drop.
   According to CPCIA, the sales revenue of the petroleum/chemical industry would see an increase of around 25% in 2008 and the profit would increase ranging 2%-5%, representing a reduced growth. The growth of the foreign trade would be around 35% and the growth of the fixed-asset investment would be around 30%.