Review and Predict      

Chemical firms are busy in doing their fiscal reports to earn more appraisals from shareholders. Investors and equities are calculating their own net earns from selling and buying companies. Analysts are releasing their projections for the new year. Advisers are helping government consider new policies. What editors can do at the year end? Maybe we can help you review the important events took placed in China's economy and petrochemical industry in 2007.
   Saving energy and reducing pollution are the top policy items for the central government throughout the year 2007, which affect more for chemical firms.  
   To control exports through reducing exports rebate rates from July 2007, can be referred as a concrete step for saving energy and reducing pollution. This event caused an exports reduction and price lift for those resource-intensive products in the second half of 2007.
   Finding energy alternative and developing renewable energy will be the spotlight for chemical firms and investors to join in. Fuel alcohol made from plants, coal to oil or olefin, solar energy and coalbed methane all are paid high attention to.
   Stock markets in China rocketed throughout the year. The index of Shanghai stock market surged from nearly 2 500 on January 4th to above 5 200 on December 28th, 2007. Most of chemical firms enjoyed a growth of more than 200% for their stock prices.
   PBC (the People Bank of China) conducted nine increases of deposit-reserve requirement rate and seven increases for deposit interest to control the overheated investment and stock markets.
   RMB has been remaining appreciation with respect to US dollars but remaining depreciation with respect to euro.
   Prices of crude oil and natural gas has moved up, pushing cost in chemical manufacturing sector to climb and finally leading to the price surge of all commercial goods. CPI lifts rapidly.  
    Recently a reader inquires which chemicals in China will be face of oversupply in the next two years. So we have to check with CCR back reports to find the important chemicals those are or have been heavily invested. Methanol, polystalline silicon, PVC, DOP, and so on, consist of a long list. But the supply of ethylene, propylene, oil products will remain tight. Seven large ethylene crackers and several large scale refineries are under construction.      
   Although CPCIA predict that China's petroleum and chemical industry will grow steadily and rapidly in 2008, I hope chemical industry develops moderately.    
   Exports policy, RMB revaluation, energy update and new GDP target will be the top items for China's economy in 2008. The affection of Olympic Game on construction sector will go down gradually. Concerning on environment and health will be more important than that on industrial development.


Zhong Weike
December 28th, 2007