Sinopec Shanghai Petrochemical’s earnings remain weak

According Sinopec Shanghai Petrochemical Co. Ltd. (SPC) despite a slight improvement in the last quarter of 2011, first quarter demand remains lackluster. Following two price increases in petrol and diesel, the company’s profitability improved from the fourth-quarter’s net loss of CNY481.63 million (US$76,187 million). However, SPC Chairman Rong Guangdao said that the increase is not significant. “Chemical prices have gone up 3% in the first quarter but the cost of our raw material – crude oil – has also gone up and has remained high for a long time,” he said. “Export sectors such as textile and other light industries remain weak, and so does domestic consumption, as reflected in property and automobile sales.” SPC is one of the subsidiaries of China Petroleum & Chemical Corporation (Sinopec Corp.). Despite Beijing’s refusal to raise crude prices as international prices rise, the company said it will produce 13% more petrol and diesel this year because it has a social responsibility to supply the market. Despite the price increases in early February and last month, Rong said that the refining industry is still in the red because retail fuel prices still fall short of the cost of crude and the cost of processing. (April 11, 2012)