Financial Performance of Petroleum & Chemical Industries Stable in H1 2017

China’s petroleum and chemical industries registered sound financial performance in the first half of 2017, with rapid increases in profits and income industry-wide. The industries saw a higher profitability, an improvement in loss-suffering enterprises and a stable industry debt in the period. However, unit industrial costs rebounded at a faster rate, dragging down the profit growth rate.
Profit in the oil and gas exploration industry totaled RMB24 billion in the first half of 2017, increasing RMB3.06 billion from the first five months of the year and accounting for 5.6% in the gross profits in the petroleum and chemical industries. The oil and gas exploration industry suffered a loss of RMB41 billion in first-half 2016.
Despite great differences in each month’s profits in the oil and gas exploration industry in H1 2017, the industry maintained an upward momentum in general. Profit in the exploration industry is expected to total around RMB27 billion in the first seven months of 2017, judging from the current crude oil price trend, as well as production and consumption data. Main business revenue in the industry is expected to arrive at around RMB515 billion during the period, up about 24% YoY.
The oil refining industry realized a gross profit of RMB93.03 billion in the first half of 2017, accounting for 21.5% in that of the petroleum and chemical industries, and up 5.3% YoY, 1.7 percentage points down compared with the growth in January-May. The main business revenue of the oil refining industry totaled RMB1 650 billion, taking up around 22.8% in that of the petroleum and chemical industries, and up 21.4% YoY, 2.1 percentage points lower than the growth in January-May. Assets in the oil refining industry amounted to RMB1 860 billion, up 9.3% YoY.
Main business cost in the oil refining industry totaled RMB1 280 billion in January-June, up 28.8% YoY, still showing a strong upward momentum. Main revenue margin in the industry arrived at 5.65% during the period, down 0.86 percentage points from the same period last year.
Profit in the oil refining industry generally kept increasing in the first half of 2017, but its growth rate slowed down. The industry saw a constant and rapid rise in costs, a fast growth in receivables, a still high inventory level, and a drop in industry profitability during the period. Profit in the industry is expected to continue to increase in the short term, but the growth rate is expected to drop further. Total profit in the industry is forecast to arrive at around RMB102 billion in January-July, up by about 3% YoY, judging from the current price trend and market consumption growth of domestic oil products.
The chemical sectors realized a gross profit of RMB304.85 billion in the first half of 2017, up 32.1% YoY, 1.8 percentage points lower than that in January-May. The profit accounted for 70.5% in that of the petroleum and chemical industries. Main business revenue of the chemical sectors totaled RMB4 940 billion, up 16.2% YoY, 0.4 percentage points lower from January-May. The revenue accounted for 68.3% in that of the petroleum and chemical industries.
Fertilizer industry still topped the chemical sectors with a total profit growth of 134.8% in the first half of the year, followed by synthetic materials with a growth of 54.6%, basic chemical raw materials with 53.9%, specialty chemicals with 19.9% and agricultural chemicals with 18.6%. Profit growth in the rubber products and coating (pigment) manufacturing sectors dropped 0.5% and 2.8% respectively, 2.7 percentage points and 2.6 percentage points slower from that in January-May.
Profits in the chemical sectors are still expected to maintain a rapid growth in the near future, judging from the production, consumption and price trends of major chemicals. Profits in the sectors are forecast to total around RMB354 billion from January to July, up about 30% YoY. Main business revenue in the sectors is expected to total around RMB5 780 billion in the period, up around 15% YoY.
Total profit in the petroleum and chemical industries reached RMB432.39 billion in H1 2017, accounting for 11.9% of the profits earned by all sizable domestic enterprises in the same period, and up 50.3% YoY, still showing a rapid growth rate. Main business revenue in the petroleum and chemical industries arrived at RMB7 230 billion in H1 2017, accounting for 12.1% of that in all sizable domestic enterprises in the same period, and up 17.7% YoY, 0.9 percentage points down from that in January-May. Assets in the petroleum and chemical industries totaled RMB12 530 billion in H1 2017, accounting for 11.7% in the total assets of all sizable domestic enterprises, and up 4.6% YoY.