China's Petroleum and Chemical Industry Went down in July    

By Feng Shiliang, China Petroleum and Chemical Industry Association (CPCIA)   

CPCIA reported on August 19th that the recovery in the petroleum and chemical industry slowed down in July. Of that, the petroleum and natural gas exploration and production sector and the refining sector remained rebounding stably while the chemical sector went down compared with June. The domestic demand was still deficit, the prices stayed at low positions, and the exports continued to decline.
   In July, the petroleum and chemical industry achieved a total production value of RMB571.4 billion, fell 3.7% from the previous month, which was the first month-on-month fall in 2009. The value fell 8.6% year on year. Of that, the petroleum and natural gas exploration and production sector reported a production value of RMB68.85 billion with a drop of 33.2% year-on-year and an increase of 15.97% month-on-month, the refining sector achieved a production value of RMB157.48 billion with a year-on-year decline of 11.7% and a month-on-month growth of 4.27%, the chemical sector amounted to RMB331.64 billion with a year-on-year increase of 0.2% and a month-on-month decline of 9.6% and the specialized chemical equipment manufacturing sector recorded RMB13.44 billion with a year-on-year increase of 7.1%, compared with the 13.7% growth in June this year. According to the data of the National Bureau of Statistics (NBS), the July production value for all industries in China increased 4.5% year over year.

Production value in China's petroleum and chemical industry by sector
Sector            in July              Growth (%)        in Jan-Jul               Growth (%)
                (billion RMB)        year-on-year     (billion RMB)         year-on-year
Total      571.41    -8.6    3 474.29    -10.3
The petroleum and natural gas exploration and production sector
         68.85    -33.2    374.00    -40.0
The refining sector
         157.48    -11.7    917.09    -15.3
The specialized chemical equipment manufacturing sector
         13.44    7.1     98.26    21.5
The chemical sector
         331.64    0.2     2084.94    -0.2
   Of which
   The chemical mining segment
         1.85    -0.7    12.76    12.9
   The basic chemical raw materials manufacture segment
         78.26    -9.7    484.00    -10.0
   The fertilizer manufacture segment
         36.01    -7.8    254.78    -1.7
   The chemical pesticide manufacture segment
        10.85    -16.1    79.75    0.2
   The coatings and pigment manufacture segment
         27.36    5.1     165.66    0.6
   The synthetic materials segment
         53.93    2.1    323.32    -4.3
   The specialty chemicals manufacture segment
          80.74    9.6    508.23    10.1
   The rubber product segment
         42.64    12.8    256.44    8.3
   Source: CPCIA

   In the chemical sector, the chemical mining and the fertilizer manufacture segments suffered bigger declines in July compared with the previous month.
   In the period of January to July the production value of the petroleum and chemical industry accumulated to RMB3 500 billion, a drop of 10.3% year over year. Of which, the production value of the chemical sector declined 0.2% over one year earlier, still in the shadow of recession, which did not match with the earlier estimation.
    By ownership, the domestic enterprises reported a combined production value of RMB462.82 billion in July, falling 7.9% year over year, the foreign funded enterprises reporting RMB68.88 billion with a year-on-year decline of 6.5% and the enterprises funded by Hong Kong, Macau and Taiwan investors reporting RMB39.72 billion with a down of 18.4% annualized.
   CPCIA found that the changes of output and selling prices were different in the four sectors, which was the main reason to cause the different results among sectors.
    The production of crude oil, natural gas and oil products increased in July, helping the two oil-related sectors grow over the previous month. The output of crude oil and oil products in July hit the all-time highs this year. In the chemical sector, many companies started to overhaul in July, which caused the output for many chemicals to decrease. Phosphorus ore reported the biggest month-on-month drop - 32.52% in July output. The month-on-month output declines for crude salt, paper pulp, sulfuric acid, potash fertilizers, chemical pesticides, pigments, dyestuffs, soap, essence, spandex, plastic film, plastic bags and aluminum oxide also exceeded double digits.
   Drawing by the increased oil price in the international market and stimulating by the new turn of officially price lifting for oil products, the prices of crude oil and oil products in domestic market in July increased significantly than that in June. Among the 1 046 chemicals traced by NBS, 39% of them witnessed a price increase over June while 43% of them suffered a price drop. The comprehensive index for the 1 046 chemicals declined by 15.81% compared with one year earlier.
    Domestic demand was still slack, CPCIA warned. The sale of oil products turned to drop in July. Most makers were facing a built-up inventory.
   The data of CPCIA show that the petroleum and chemical industry exported totally RMB30.17 billion (counting on ex-factory prices) in July, fell 2.1% than the previous month and 22.3% than the year-ago period. The cumulative exports in the first seven months plummeted 23.5% compared to the same period of 2008. Of that, the exports of basic chemicals, pesticides, coatings and pigments, and synthetic materials declined by over 30%. On the other hand, the imported amount for some petrochemicals remained growing on the support of low