Recovery Continued in October    

China Petroleum and Chemical Industry Association (CPCIA)
In October Chinese petrochemical industry reported an accelerated recovery with high production value and rapid growth in output and improvement of operation rate in some sectors. Demand for major chemicals continued to pick up while prices remained steady, the investment was still interested in this industry and the year-on-year drop in imports and exports was less than the previous month.
   In October, China's petroleum and chemical industry achieved a combined production value (output multiplied by current price) of RMB612.17 billion, slight lower than the previous month and growing 9.9% year over year. The month-on-month drop may be caused by the long holiday in October, while the higher year-on-year growth may be related to the recession in the same period of 2008.
   The cumulative production value in the first ten months was RMB5 290 billion, falling 6.0% year over year, compared with the 7.9% drop in the first nine months.

Production value in China's petroleum and chemical industry by sector
Sector    in October    Growth (%)      in Jan-Oct        Growth (%)
    (billion RMB)    year-on-year    (billion RMB)     year-on-year
Total      612.17    9.9    5 292.02    -6.0
The petroleum and natural gas exploration and production sector
    69.61    -16.6    580.10    -35.6
The refining sector
    171.57    5.1     1 419.96    -10.3
The specialized chemical equipment manufacturing sector
    14.08    -9.2     139.60    12.5
The chemical sector
    356.91    21.2     3 152.36    4.3
   Of which
   The chemical mining segment
    2.26    49.5    19.07    15.9
   The basic chemical raw materials manufacture segment
    89.69    19.7     746.47    -4.3
   The fertilizer manufacture segment
    38.67    11.5    372.66    -0.5
   The chemical pesticide manufacture segment
    9.73    8.6     109.73    2.8
   The coatings and pigment manufacture segment
    29.68    25.3    254.38    7.8
   The synthetic materials segment
    54.63    21.1    492.30    1.7
   The specialty chemicals manufacture segment
    88.54    26.5    768.46    13.2
   The rubber product segment
    43.70    22.4    389.29    12.6
   Source: CPCIA

   Among the 62 petrochemicals tracked by CPCIA, 55 petrochemicals witnessed the year-on-year growth of output in October. Of that, 46 petrochemicals enjoyed a double digit growth. Crude oil output declined 1.8% to 16.255 million tons. The natural gas output was 7.19 billion cubic meter, growing 10.2% year over year. The whole country is facing a serious problem - natural gas supply deficit, which has brought impact on many manufacture consumers like chemical fertilizer makers. In October China's refineries together processed 33.286 million tons of crude oil, up 10.4%. According to the data of CPCIA, the average operation rate for the country's 23 ethylene crackers was 100% in October. The synthetic resin production lines were basically operating at 95% of the full capacity. CPCIA said the operation rate in the refining sector and sulfuric acid manufacture sector also picked up.
   The umbrella price index that was supplied by the National Bureau of Statistics through tracking 1 046 petrochemicals was 88.06 in October (equivalent to a 11.94% drop over the year-ago period), compared with 81.30 in this August and 85.80 in September. In October the reported rate of sale/production was 99.4% in the whole industry, compared with 97.3% in the same period of 2008.  
   The investment growth in the petrochemical/chemical industry continued to slow down in October. In the first ten months, the total fix asset investment in China's petroleum and chemical industry was RMB769.95 billion, increasing 10.66% over one year earlier, compared with the year-on-year growth of 11.54% in the first nine months. By sector, the combined investment made by the chemical sector shared 66.8% in the industry's total, a growth of 26.6% over one year earlier. The investment in the petroleum and natural gas exploration and production sector plunged by 14.9% year over year and the refining sector dropped by 14.4%. Among the chemical sector, the money invested in the phosphorus segment rose 74.3% year over year, the compound fertilizer segment increasing 54.4%, the pesticide segment 31.5%, the coatings and pigments segment 36.6%, the specialty chemicals segment 36.4%, the synthetic materials segment 29.2% and the rubber products segment 31.7%.
   In October the combined exports of the petrochemical industry was RMB33.28 billion, hitting the year's high, plummeting 7.6% over the year-ago period (the year-on-year drop was 14.5% in September, according to CPCIA). For the first ten months, the combined exports reached RMB291.85 billion, falling 19.8% over the same period of 2008. The year-on-year drop in the first nine months was 20.9%.
   Three problems CPCIA warned domestic petrochemical firms in its report include the slack market with heavier overcapacity, investment going down with delayed effects and plunged exports with the impact of increased imports.