Petrochemical Industry Recovers Well in August     

By China Petroleum and Chemical Industry Association (CPCIA)   

According to the latest report of CPCIA, driven by the improved macro economy, China's petroleum and chemical industry accelerated its recovery steps in August, featured with increased output, narrowed fall of production value, recovered demand for major bulk chemicals, steady prices and the rapidly grew investment. However, some sectors in this industry operated well bellow their full capacities, the petrochemical market were still dull, exports were blocked, and the investment in some oversupply sectors increased highly. CPCIA thought these problems will bring difficulties to the recovery.
     In August, China's petroleum and chemical industry achieved a total production value of RMB579.38 billion, falling 6.2% year over year but increasing 1.4% from the previous month. The year-on-year drop was lower than 8.6% in July. Of that, the chemical sector dedicated to RMB341.68 billion with a year-on-year growth of 7.4%, the petroleum and natural gas exploration and production sector amounted to RMB66.07 billion with a drop of 37.4% year-on-year and a drop of 4.04% month-on-month, the refining sector achieved a production value of RMB158.44 billion with a year-on-year decline of 12.1% and a month-on-month growth of 0.6%, and the specialized chemical equipment manufacturing sector recorded RMB13.19 billion with a year-on-year drop of 2.2% and a month-on-month fall of 1.86%.
   The cumulative production value posted by the petroleum and chemical industry in the first eight months fell 9.6% annualized, compared with 10.3% in July. Of which, the chemical sector gained a positive growth of 1.0% while it fell 0.2% in the first seven months, basically meeting with CPCIA's earlier expectation. Among seven segments in the chemical sector, the rubber product and the coatings and pigment manufacture segments contributed more to the sector's positive growth.

Production value in China's petroleum and chemical industry by sector
Sector      in August      Growth (%)      in Jan-Aug     Growth (%)
         (billion RMB)     year-on-year     (billion RMB)     year-on-year
Total      579.38    -6.2    4 060.41    -9.6
The petroleum and natural gas exploration and production sector
         66.07    -37.4    441.48    -39.5
The refining sector
         158.44    -12.1    1 075.67    -14.7
The specialized chemical equipment manufacturing sector
         13.19    -2.2    111.31    17.9
The chemical sector
         341.68    7.4     2 431.95    1.0
   Of which
   The chemical mining segment
         1.76    -4.1    14.45    10.6
   The basic chemical raw materials manufacture segment
         83.12    -1.3    568.12    -8.7
   The fertilizer manufacture segment
         37.71    -4.6    293.11    -2.0
   The chemical pesticide manufacture segment
          9.89    1.1     89.61    0.6
   The coatings and pigment manufacture segment
         27.89    16.7    194.54    3.4
   The synthetic materials segment
         57.31    12.6    381.59    -2.2
   The specialty chemicals manufacture segment
         80.98    13.6    590.23    10.6
   The rubber product segment
         43.03    16.9    300.31    10.4
   Source: CPCIA

    Among the 62 key petrochemicals tracked by CPCIA, 55 witnessed a year-on-year output growth in August. China processed 32.558 million tons of crude oil in August, up 9% over one year ago. The ethylene output in August increased 11.6% over the year-ago period, and the fertilizer output increasing 9.3%, chemical pesticides 14.8%, tires 22.1%, synthetic resins 14.9%, synthetic rubbers 15.5%, coatings 17.4%, pigments 19.1% and dyestuffs 55.1%.
   August data stated that the demand for petroleum products picked up, and the demands for agrochemicals, some organic chemicals and synthetic materials continued to grow rapidly. The sale amount of oil products was 18.78 million tons in August, being the monthly highest this year to date, increasing 3.2% year over year and 8.1% over the previous month, which showed that the domestic economic actions were more frequent than before. In August China's automobile output increased 90% over the same period of 2008, the electric cable output increasing 22%, papermaking 18.8%, plastic products 9.2%. The high growth in these related industries helped largely the petroleum and chemical industry to recover.  
   Totally, petrochemicals prices stayed steadily at a low level in August. Pressures on price increase varied from different sectors. The prices of most fertilizers went down in August. Urea's average price fell 4.8% on the previous month, and the average price of diammonia phosphate was 1.6% lower than that in July. It is expected that the chemical fertilizer market will have no chance to pick up in the remaining of 2009, due to softened exports and slow season. Prices of most inorganic raw materials continued to drop slightly or hesitated at low level, while that of organic raw materials remained going up. In August the price of nitric acid plummeted by 21.87% on the previous month, that of soda ash plunged by 5.1% whilst the price of styrene monomer went up 13.2% month on month, propylene price surged by 13.2%, and methanol price fluctuated at a low level. According to CPCIA, the prices of polyvinyl chloride, caprolactam and styrene-butadiene rubber had a month-on-month increase of 4.9%, 7.4% and 9.5% respectively. Crude oil price in August hit the yearly high. CPCIA predicted that the global crude oil price will go on increasing and the increasing rate will accelerate along with the recovery of world economy.   
   The investment in the chemical sector continued to increase rapidly in August, whilst the investment in the whole petroleum and chemical industry slowed down. In the first eight months, China's petroleum and chemical industry totally invested RMB594.9 billion in fix assets, an incr