Sinopec slows down on capital expenditure

Sinopec Shanghai Petrochemical, the nation’s biggest ethylene producer by output, will cut its capital expenditure to 1.6 billion yuan (US$233.6 million) from an initial 2.5 billion yuan (US$365 million) due to a construction slowdown in several projects. The third quarter is going to be the most difficult quarter for us, whereas overall conditions for the fourth quarter may turn better, said President Rong Guangdao. He said there is normally a two-month delay before the cost of crude oil imports factors into its operation. Crude price, he said, peaked late in the second quarter, which means the company is processing crude imported at the highest price so far this year. We are very worried as the government still hasn’t unveiled the subsidy plan. The third quarter is very hard. We hope the government can be more transparent in disclosing grant plans,” Rong said. The company has slashed its budget due to tight cash position. Its liabilities surged 29.5% to 11.53 billion yuan (US$1.7 billion), bringing debt-to-equity ratio to 58.4% from 42.5% year on year. It reported a first-half net loss of 358.1 million yuan (US$52.3 million) from last year’s interim net profit of 1.79 billion yuan (US$261.3 million). (September 2, 2008)