Chemical profits are up in China

Higher first-half earnings at Chinese petrochemical producers are contradicting predictions that the Chinese profit boom is ending (C&EN, June 6, page 19). Petrochemical operating income was up 80% to $1.3 billion at China Petroleum & Chemical Corp. (Sinopec). This helped to boost net profit to $2.4 billion in the first half of 2005, up 17.3% from the same period of last year. The improvement and a 69% boost in exploration and crude oil operations made up for a $160 million operating loss in refining resulting from government price controls. At Sinopec subsidiary Shanghai Petrochemical Corp., net profit was up more than 15%. SPC achieved an improvement in petrochemical margins of only a few percentage points, while refining margins fell but did not go into loss. A 195% surge in PetroChina's petrochemical margins helped the oil conglomerate's net profits to soar 36.1%. Going forward, SPC expects slower demand growth. It also fears that the commissioning of Sinopec's petrochemical joint ventures with BP and BASF earlier this year will squeeze petrochemical margins.