Brief Analysis of Shanghai Chemical Industry Economic Operation in the First Half of 2020
2020-10-13    [Source:PUdaily]

Pudaily, Shanghai --

    According to data released by the Shanghai Municipal Bureau of Statistics, Shanghai's petrochemical and fine chemical manufacturing industry achieved a total industrial output value of RMB 28.037 billion  in June, up by 2.68 percent MoM, and 5.5 percent year-on-year; the total industrial output value completed from January to June was RMB 159.724 billion, down by 6.0 percent year-on-year, narrowing by 1.9 percent from January to May.

    Shanghai Chemical Industry Association tracked the economic performance of four major petrochemical enterprises and two chemical parks in Shanghai. It shows in June, the total industrial output value of the four enterprises and two parks reached RMB 20.861 billion, up by 5.60% year-on-year, an increase of 3.4 percentage points over May; down by 19.67% year-on-year, and the decline rate increased by 1.41 percent from May. The completed profit was RMB 2.252 billion, up by 302.14% month-on-month; it was 28.12% lower year-on-year, which was 138.36% lower than in May. The total industrial output value from January to June was RMB 122.828 billion, a decrease of 19.67% year-on-year, and a profit of RMB 1.117 billion, a decrease of RMB 2.412 billion, a decrease of 92.75% year-on-year, from January to May. The rate of decline continued to narrow by 17.23%.

    In the first half of 2020, the economic operation of Shanghai petrochemical industry showed a trend of decline before rising, from negative to positive, with a restorative growth of main economic indicators, and steady recovery. It is mainly manifested in the following three aspects.

    1. The main enterprises running sluggish, output growth momentum is insufficient.

    From January to June, the total industrial output value of Shanghai's petrochemical and fine chemical manufacturing industry was estimated at RMB 159.724 billion. It was 6.0% lower than the same period last year. SC Johnson, Johnson & Johnson, Bebop and other fine chemical industries grew strongly, but the output value of most petrochemical and fine chemical enterprises declined at a double-digit rate, with Shanghai Petrochemical and Gaoqiao Petrochemical declining by 22.90% and 24.38% respectively. Shanghai Petrochemical's crude oil processing volume decreased by 5.8% year-on-year from January to June, and commodity volume decreased by 2.8% year-on-year; demand for refined oil products fell sharply due to the pandemic, and production was reduced, with jet coal production reduced by 33%; the average price of products fell by 19.4% year-on-year in aggregate due to the oil price war, which led to a sharp drop in crude oil prices. As a result, from January to June, the cumulative output value fell by RMB 8.7 billion, down by 22.3 percent year-on-year.

    2. The benefit of the oil industry is growing, while the chemical industry is hovering around the trough.

    Since Q2, the resumption of work and production in various domestic industries continued to push. The contradiction between the supply chain and the industrial chain, which was relatively prominent in the early stage, has been alleviated, and the international crude oil price has stopped falling and rebounded after a tragic collapse. The market has stabilized. The Commodity Price Index (CCPI) began to rise slowly in late April and rose by 10% (3536/3215) in early June. Driven by the strong rise in crude oil prices, the oil industry achieved good results in June, with Shanghai Petrochemical achieving a profit of RMB 782 million in June; Gaoqiao Petrochemical achieved a profit of RMB 614 million, turning profit growth from negative to positive. Compared to the oil efficiency growth, the chemical industry is still sluggish. In June, the prices of methanol, acetic acid, ethyl acetate, caustic soda and acrylic acid continued to fall by 6.54%, 12.80%, 2.83%, 7.80% and 2.81% respectively. Output of methanol, acetic acid, caustic soda, PVC and paint fell by 45%, 98.8%, 27.2%, 19.7% and 26.3% respectively.

    3. The economic operation goes against the trend, with many highlights in resuming work and production.

    With the domestic epidemic under effective control since March, Huayi Group went all out to resume work and production, and mobilized all employees to carry out the activity of "overcoming difficulties and improving efficiency", determining to win the battle of epidemic prevention and control. Subordinate enterprises of the Group benchmarked against domestic and foreign advanced indicators, and strengthened the assessment of product energy consumption and production costs. And the Group grasped the construction of new projects.

    Shanghai Petrochemical actively responded to the petrochemical group's "continuous striving to create efficiency" action, successfully developed high-performance large-diameter black pipeline material; successfully switched to the production of special materials for melt-blown cloth, opening up the whole industry chain of mask production, and helping to prevent and control the epidemic; carried out the research and development of carbon fiber products, improving the quality and efficiency of industrial production and application; built  new material industry base, and jointly promoted the research and development of new materials with local governments and neighboring enterprises.

    The Shanghai Chemical Industry Zone will speed up the layout of high-end chemical industries to support the development of strategic emerging industries to create a world-class green chemical industry cluster.


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