China's petroleum and chemical industry expected to grow at a slower pace this year

08-Aug-12

China's petroleum and chemical industry is expected to grow at a slower pace this year, pulled down by the losses in oil refinery businesses and weakening raw material demand from export-oriented sectors, an industry federation said in GlobalTimes. The industry's total output is expected to reach 12.73 trillion yuan (US$2 trillion) in 2012, a 14.5% increase year-on-year, as per the China Petroleum and Chemical Industry Federation (CPCIF). The sector saw growth of 31.5% year-on-year in 2011. Profits are likely to rise to 860 billion yuan in 2012, up 5% from a year earlier. The industry is facing downward pressure, due to sluggish demand from export-oriented sectors such as textiles and toy manufacturing, as well as rising productioncosts, a growing tax burden and largescale losses in the refinery and natural gassectors, said Li Yongwu, chairman of CPCIF. The refinery sector lost 16.6 billion yuan in the first five months of 2012, mainly due to high crude prices in the first quarter. However, Li said a recovery in the domestic economy will boost demand for petroleumand chemical products in the second half of this year. The sector is expected to have better performance in the third quarter, because of lower priced crude oil purchased in May and a potential rise in retail oil product prices," he said. Analysts expect China will raise fuel prices later this week following three consecutive cuts earlier this year.