In its 1H results Shanghai Petrochemical, part of Sinopec, reports a 37.6% increase in sales over same period last year.

Shanghai Petrochemical Company announced today its unaudited operating results, prepared under International Financial Reporting Standards (IFRS) for the six months ended June 30, 2011.

According to IFRS, turnover amounted to CNY49.5 billion (US$7.75 billion), representing an increase of 37.01% over the previous year. Profit attributable to equity shareholders of the company amounted to CNY1,425.7 million (2010 interim: CNY1,513.7 million). Basic earnings per share came in at CNY0.198 (2010 interim: CNY0.210). The board does not recommend a payment of any interim dividend for 2011.

Rong Guangdao, chairman of Shanghai Petrochemical, says: "In the first half of 2011, the Chinese economy continued to maintain stable and relatively fast growth, while China's petrochemical industry continued to maintain a healthy and steady operation. However, international crude oil prices surged significantly and stayed at high levels, and the profitability of the oil refining industry declined substantially, resulting in a turnaround from profits to losses.”

In the first half of 2011, the Group's net sales amounted to CNY46.34 billion, representing an increase of 37.61% year-on-year. Net sales derived from petroleum products, intermediate petrochemicals, resins and plastics, synthetic fibres and trading of petrochemical products increased by 46.78%, 29.87%, 13.04%, 22.53% and 87.10% respectively.

Total volume of goods produced increased by 14.87% year-on-year. During the first half, the company processed 5.68Mt of crude oil (including 131,400t of crude oil processed on a sub-contracting basis), an increase of 12.60% year-on-year. Outputs of gasoline, diesel and jet fuel were 510,300t, 2,055,700t and 402,500t respectively, representing increases of 10.24%, 33.49% and 5.78% year-on-year respectively.

Outputs of ethylene and propylene were 492,100t and 258,700t respectively, representing decreases of 0.36% and 4.30% year-on-year respectively. Output of synthetic resins and plastics (excluding polyester and polyvinyl alcohol) was 570,800t, representing an increase of 0.39% year-on-year. Outputs of synthetic fibre monomers, synthetic fibre polymers and synthetic fibres were 499,600t, 326,400t and 129,100t, respectively, representing an increase of 0.04%, a decrease of 1.03% and an increase of 4.20% year-on-year respectively. The company's output-to-sales ratio and receivable recovery ratio for the Period were 99.85% and 99.37% respectively.

In the first half of 2011, international crude oil prices fell after a rise but in general tended to surge significantly and remained at high levels. The company's average unit cost of crude oil processed was CNY4,937.91/t in the first half of 2011, representing an increase of 25.57% year-on-year. The company's total costs of crude oil processed during the first half increased substantially by 42.89% year-on-year to CNY27.39 billion, accounting for 61.76% of the cost of sales.

During the first half, the company commenced the construction of the new 3.9Mta residual oil hydrogenation plant, the new 3.5Mta catalytic cracking plant and the carbon fibre project with a capacity of 1500tpa. Preliminary works for other projects such as the ethanolamine project with a capacity of 50,000tpa and the EVA (ethylene-vinyl acetate copolymer) project with a capacity of 100,000tpa went ahead.

Meanwhile, other key technological renovation projects such as optimisation of energy saving and consumption reduction at No. 2 PTA Plant, the renovation on energy conservation and consumption reduction of No. 2 and No. 3 aromatics complexes, No. 4 main transformer of the 220kV petrochemical substation and the capacity expansion of No. 6 main transformer of the No. 1 thermal power station, were also carried out.

Guangdao says: "In the second half of 2011, there will be numerous uncertainties and instabilities during the process of recovery of the world economy. Amid steady and relatively fast development, China's economy will be faced with the contradictions and problems of unbalanced and uncoordinated development.

"Although the economic operation of the domestic petrochemical industry will maintain a stable and sound trend in general, the industry also faces pressures from policies, energy resources and environmental protection restrictions. Meanwhile, international crude oil prices are likely to lose the momentum for a substantial rise but to fluctuate at relatively high price levels. The Group expects that the cost pressure upon enterprises will increase and market competition will further intensify in the second half."

Shanghai Petrochemical is one of the largest petrochemical companies in China in terms of sales revenue and was one of the first Chinese companies to complete a global securities offering. Located in the Jinshan district, southwest of Shanghai, it is a highly integrated petrochemical enterprise, which processes crude oil into a broad range of products such as synthetic fibres, resins and plastics, intermediate petrochemicals and petroleum products.