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Shanghai Petrochemicals reports massive losses

25
Dec '08
Despite the recent plunge in crude oil prices and touching four year lows, the petrochemical industry still faces huge losses. Yesterday, Shanghai Petrochemical Company Ltd., owned by China Petrochemicals announced that its loss in the fourth quarter would be larger than that in the third quarter, due to five major negative factors.

Impact of lower price from overseas supply markets, weak demand from lower reaches, carry forward inventory of high priced crude oil, abolition in subsidies of refined oil. Overall the company expects to incur a massive loss for the full financial year in 2008.

The third quarter report of the company reveals that the total loss of the three previous quarters was about Yuan 2.67 billion. After considering the accumulated loss amounting to Yuan 373 million in the first half of 2008, the total loss of the third quarter reaches 2.30 billion.

In accordance with the expectation of Shanghai Petrochemical that the loss in the fourth quarter would be larger than the loss of the third quarter, the loss of the company for the whole year would be over 5 billion Yuan.

The other reasons put forth by Shanghai Petrochemical are that price of petrochemical products has dropped significantly and due to slowdown in demand production cuts were implemented resulting in the massive losses.

Most prices of domestic petrochemical products have fallen to the lowest point in recent years. In comparison to the highest level of this year, current price level of main petrochemical products has declined more than 60 percent.

Shanghai Petrochemical also added by saying that said that in the fourth quarter, oil refineries would not get subsidies from the government. It is also learned that Shanghai Petrochemical has obtained a total amount of 2.23 billion Yuan in subsidies for the first three quarters, of which, subsidies for the third quarter alone totaled to 600 million Yuan.


Fibre2fashion News Desk - China


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