China's oil refiners report huge losses this year

(Xinhua)
Updated: 2008-11-06 14:06

BEIJING - China's oil refiners suffered losses of more than 120 billion yuan (US$17.58 billion) in the first nine months, says the China Petroleum and Chemical Industry Association (CPCIA).

The world financial turmoil and economic downturn in the third quarter had a negative impact on the country's oil and chemical industries, according to a CPCIA report released on November 5.

Estimated sales revenue totaled 4.9 trillion yuan in the first three quarters, up 31.5 percent from the same period last year. Profits climbed 3.4 percent to 418.7 billion yuan, with the chemical sector up 31 percent and the oil and gas drilling sector up 53.4 percent.

Feng Shiliang, CPCIA vice secretary, said the worsening financial crisis, especially since September, had dampened growth of output and production value in the chemical and oil sectors and induced a sharp price fall, which eroded earnings.

In the first three quarters, gross industrial output value hit 50 trillion yuan, up 32 percent. However, growth had slowed since August and in September fell to record low of 25.1 percent, 9.8 percentage points lower than a month earlier.

The slowing demand drove inventories up and prices down, which depressed production and sales. The dim economic outlook further dented market confidence.

Among 168 types of products under CPCIA's observation, 106 posted month-on-month price falls, including fertilizer, pesticide, plastic and rubber.

For instance, the price of nitric acid dropped 59.1 percent from 4,400 yuan per tonne in September to 1,700 to 1,800 yuan per tonne in early October. Sulfuric acid was priced at 400 yuan per tonne in the early October, down 80 percent from 1,980 yuan per tonne in September.

Feng said rising costs and weakening exports also hurt the chemical and oil industries.

Investment growth in the coal chemical industry and chemical raw materials sector remained fast, which would cause excess production capacity.

However, Feng was optimistic about the outlook, saying, "Following the central government's macro-control policy and active measures are necessary to maintain stable development."

He also predicted the growth of sales income would reach 26 percent in such sectors, 6 percent for profit growth, 35 percent for trade and 30 percent for fixed assets investments.