Top Asian refiner China Petroleum & Chemical Corp's chemical business has retuned to profit in the first two months of the year after some product prices rebounded.
Sinopec, as China Petroleum is known, aims to swing its chemical unit into whole-year profit by optimizing production and cutting costs, the company's parent said yesterday in its newsletter, Sinopecnews.
Sinopec posted an operating loss of 13.1 billion yuan (US$1.9 billion) from its chemical operations last year, versus a profit of 13.3 billion yuan in 2007, after product prices plunged since July amid the financial turmoil.
Haitong Securities analyst Deng Yong said last month that the chemical sector would still find it hard to make money in 2009, although Sinopec's longtime money-losing refining business would turn to profit this year thanks to a new fuel pricing mechanism.
Major product prices plunged 39 percent to 71 percent by the end of last year from a mid-year high, Sinopecnews said. Sinopec has slashed output since July to work off inventories, which returned to normal levels in November, it said.
Wu Haijun, director of the chemical unit, attributed profits in the first two months to a big price gap between chemical products and naphtha, a petrochemical feedstock. But Wu said a large gap wouldn't remain for long against the backdrop of a weak global petrochemical market.
The domestic petroleum and chemical industry has shown signs of recovery in the first two months of this year, especially in February, with prices and production rising for some products, but the impact of the financial crisis persists and the industry is still locked in a downward cycle, the China Petroleum and Chemical Industry Association said last month.
(Shanghai Daily April 8, 2009)
