Economy

Sinopec Shanghai Petrochemical profit hits $307m

By Qiang Xiaoji (chinadaily.com.cn)
Updated: 2010-03-07 13:57

The Sinopec Shanghai Petrochemical Company made a net profit of 2.1 billion yuan ($307.62 million) in 2009 amid the continuing global economic crisis, Rong Guangdao, the company’s chairman and deputy to the National People's Congress disclosed yesterday. He also suggested, however, that the recent problems with overcapacity in the sector should be better regulated, the Beijing Times reported.

Rong said the structure of the petrochemical industry is not well-balanced, as the industry has several overcapacity problems and productivity is still increasing. According to Rong, the National Development and Reform Commission (NDRC), the national planner, is not tough enough in regulating the distribution of the industry.

Rong said oil refiners with a capacity of over one million tons totaled more than 100 in the country. They are scattered in almost every province and autonomous region except Guizhou, Qinghai and Yunnan provinces. Ethylene is produced in 16 provinces.

He explained that a generally-accepted principle in the petrochemical industry is that production should be centralized in the coastal areas. He also pointed out that China is the world’s number one provider of oil refining and ethylene, but there are too many small refiners and manufacturers.

Shanghai Party Secretary Yu Zhengsheng said that since the petrochemical industry is a money-generating sector that greatly contributes to local governments’ revenue, every province rushes to increase production.

Rong thinks the current distribution is not in accordance with a resource-efficient development strategy, as only 70 percent of the capacity has been used. Since the industry has very strict requirements on environment protection and production safety, he advised the NDRC to be stricter in regulating the sector to close all the manufacturers with a capacity under 2 million tons instead of just limiting new production.