Economic Performance of Sinochem Group in 2009
Year:2010 ISSUE:23
COLUMN:COMPANY FOCUS
Click:338    DateTime:Dec.07,2010
Economic Performance of Sinochem Group in 2009    

Sinochem Group, China's current biggest chemicals trader, previous controller of petroleum import and today's monopoly importer of potash fertilizer, is now the majority shareholder of three listed companies - Sinochem International Corp. (SH: 600500), Sinofert Holdings Ltd and Franshion Properties (China) Ltd. Its business covers energy, chemical, house-building, agriculture and finance.

1. Energy section:

Sinochem Group's energy section aims to perfect its industrial chain and solidify its industrial base in 2009.

Petroleum exploration and production segment

In 2009, Sinochem Petroleum Exploration & Production Co Ltd (PEPC) successfully acquired the energy company Emerald Energy Plc who was listed in the British stock market to further expand the scale of the group's oil and gas reserves, marking that Sinochem's overseas strategic layout has taken shape preliminarily. PEPC now owns 26 oil and gas contract blocks at home and abroad and acts as the operator at 12 blocks of them. By the end of 2009, PEPC occupied a recoverable oil and gas reserve of 234 million barrels. In 2009, its annual oil and gas output reached 1.93 million tons (oil equivalent), increasing by 510 000 tons (oil equivalent) compared to the previous year, up 36% year on year.

Oil trade segment
In 2009, Sinochem achieved a total crude oil and refined oil trade of about 50 million tons, increasing significantly against 2008. In the sales of refined oil, the company steadily constructed more gas stations in its retail network on its own and through cooperation with the French oil company Total Petrochemicals. Now, the company has about 150 gas stations in the Bohai Sea rim, the Yangtze River Delta region and Fujian province. In 2009, Sinochem achieved a retail refined oil sales of more than 400 000 tons.

Oil storage and logistics segment
The 300 000-ton terminal of Sinochem Xingzhong Oil Staging (Zhoushan) Co Ltd and a number of oil warehouses and terminals of Sinochem Yangzhou Petrochemical Terminal Co Ltd and Sinochem Shanghai Orient Terminal Co Ltd have been successfully completed and put into operation. As of the end of 2009, Sinochem Group's storage capacity of tanks in operation or under construction had reached about 13 million cubic meters, and its terminals in operation or under construction had reached more than 1 million tons. Sinochem has further solidified its status as China's largest third-party petrochemical storage and logistics operator.

Oil refining segment

The construction of Sinochem Group's 12 million t/a refinery in Quanzhou, Fujian province is going forward steadily.

2. Agricultural section -
chemical fertilizer, pesticides and seeds segments.

Fertilizer segment

In 2009, Sinochem further strengthened and promoted the strategic transformation of its chemical fertilizer business and further solidified its status as China's largest comprehensive agricultural service provider which integrates the R&D, production and sales of various fertilizers. In 2009, the group sold a total of 15.23 million tons of chemical fertilizer and continued to occupy the largest market share in China's fertilizer market. In the aspect of resources development, Sinochem further consolidated its strategic cooperation with Qinghai Salt Lake Potash Co Ltd and Qinghai Salt Lake Industry Group and actively acquired potassium mineral resources in Tibet of western China and in Kazakhstan. In fertilizer production, Sinochem's 13 subsidiary companies together produced nearly 9 million tons of fertilizers in 2009. Its nitrogenous, phosphate and compound fertilizer plants maintained an average operating rate of more than 85%, well above the domestic average. In the area of fertilizer marketing, Sinochem owned a total of 2 036 distribution centers by the end of 2009.

Pesticides segment

In 2009, Sinochem Group actively developed the Southeast Asian market with achieving good results. In the aspect of R & D, the GLP Lab for Safety Evaluation at Shenyang Research Institute of Chemical Industry completed its non-human Primates Testing Lab and Pesticide Ecology Hazard Evaluation Program and made substantial progress in international certification. As for pesticide production, the Shenyang institute completed its Science Innovation Park Phase II construction and formally put the project into operation. After Sinochem International Corp became the largest shareholder of Nantong Jiangshan Agrochemical & Chemicals Company Limited (SH: 600389), it continued to push forward the joint R&D of glyphosate waste treatment technology and completed the re-licensing of Monsanto amides production technology to Nantong Jiangshan Agrochemical. The pesticide formulation plant that Sinochem International Corp established in India began pilot production in August 2009 to supply pesticide formulations to the local market. In the field of pesticide marketing and sales, Sinochem Group made progress in making use of its fertilizer sales network to sell pesticides developed and produced by its Shenyang institute and other subsidiaries. Sinochem's pesticide sales in India, Philippines and other Southeast Asian markets grew steadily. In the Indian market, Sinochem introduced its own brand of pesticide formulations and got good sales results.

Seeds segment

In 2009, Sinochem made progress in its strategic cooperation with Hubei province and Huazhong Agricultural University in transgenic rice breeding.

3. Chemical section: extending toward R&D and production.

Fluorine chemicals segment

In 2009, Sinochem Group strengthened its independent innovation ability and increased input in R&D. It has now formed a polymer-fluorine containing fine chemicals industrial chain that uses alternative resources. By the end of 2009, the company had occupied nearly 7 million tons of fluorite reserves, its production capacity of hydrofluoric acid and ODS (Ozone Depleting Substances) substitutes were number one in China, and its capacity of fluorine polymers and fine chemicals also grew further. In the areas of ODS substitutes, Sinochem's R&D strength leads in China and has reached an initial level of global competitiveness. At the same time, the company's fluorine chemical business has developed a relatively stable sales network and customer base. In 2009, its total production vs. sales ratio reached 98%, and several of its products occupied the biggest market share in the domestic market and even in the international market.

Natural rubber segment

After successfully acquiring Malaysia's EUROMA RUBBER Industries Sdn Bhd and Singapore's listed company GMG Global Ltd, Sinochem smoothly finished consolidating the internal resources of its rubber business in 2009. In that year, EUROMA RUBBER achieved its best revenue in history, and GMG completed its private placement and obtained substantial progress in the acquisition of an Indonesian natural rubber plant. In 2009, Sinochem's total global sales volume of natural rubber grew by 24% and accounted for a market share of 4% in the global market.

Chemical logistics segment

Sinochem's high-end liquid chemicals comprehensive logistics business continued to lead in China. Sinochem and famous international liquid chemicals shipping company Stolt Nielsen S.A. set up a joint-venture company, which has China's largest-sized and highest-safety-level dangerous chemicals fleet and land transport containers and controls more than 40 ships with a shipping capacity of more than 300 000 tons. In 2009, Sinochem and America's Newport Corporation carried out strategic cooperation to jointly expand their container logistics business in Europe, Americas and the Mideast.

Pharmaceuticals segment

In 2009, Sinochem continued to keep its import & export volume of pharmaceutica