China's petrochemical industry's revenue and profits will drop in 2020

According to a report recently released by the China Petroleum and Chemical Industry Federation, due to the impact of the covid-19 epidemic and low oil prices, China's petrochemical industry will achieve operating income of 11.08 trillion yuan in 2020, a year-on-year decrease of 8.7%; total profits of 515.55 billion yuan, a year-on-year decrease of 13.5% .

Fu Xiangsheng, vice chairman of the China Petroleum and Chemical Industry Federation, pointed out at the report conference that in 2020, industry revenue and profits will drop sharply, which is extremely rare in the history of my country's petrochemical industry. The main reason is that the COVID-19 epidemic has spread globally. It will have a serious impact on the world economy. In 2020, the prices of my country's major petrochemical products will fall, but production and consumption will continue to grow.

From the perspective of product prices, due to the spread of the COVID-19 epidemic and the downward global economic turmoil, the overall price of chemical products in my country in 2020 will drop by 6.4% year-on-year. From the perspective of production and consumption, my country’s crude oil output in 2020 is 195 million tons, a year-on-year increase of 1.6%, and apparent consumption is 736 million tons, a year-on-year increase of 5.6%; natural gas production is 188.85 billion cubic meters, a year-on-year increase of 9.8%, and apparent consumption 325.36 billion cubic meters, a year-on-year increase of 7.3%; total production of major chemicals increased by 3.6% year-on-year, and apparent consumption increased by 4.6% year-on-year.

Zhu Fang, deputy secretary-general of the China Petroleum and Chemical Industry Federation, pointed out that the trend of industry sector operation indicators differentiation in 2020 is more obvious. In terms of revenue, the revenue of the oil and gas mining sector fell 17.6% year-on-year, the oil refining sector fell 15.5% year-on-year, which was lower than the industry average, while the chemical sector fell 3.6% year-on-year, better than the industry average. From the perspective of profit, the profit of the oil and gas mining sector fell by 82.3% year-on-year, the oil refining sector fell by 45.6% year-on-year, which was significantly lower than the industry average, while the profit of the chemical sector increased by 25.4% year-on-year, which was higher than the industry average.

Fu Xiangsheng pointed out that although the petrochemical industry will be extremely difficult in 2020, during the "13th Five-Year Plan" period, my country's petrochemical industry has consolidated its status as the world's second largest petrochemical country and the world's largest chemical country, and its contribution to the world's petrochemical market has stabilized at around 40%. At the same time, my country's petrochemical industry has made significant progress in eliminating outdated production capacity, accelerating transformation and upgrading, optimizing industry and product structure, and promoting innovation and green development.

Looking forward to the future, Fu Xiangsheng said that in 2021, despite the uncertainty of the new crown pneumonia epidemic and world economic growth, which will pose challenges to my country's economic development, my country's economy is still expected to maintain a steady growth momentum and chemical production growth is expected to accelerate.

Faced with a serious surplus of domestic bulk basic petrochemical products, Fu Xiangsheng said that China's petrochemical industry, especially the sub-sectors of chemical fertilizer, chlor-alkali, soda ash, calcium carbide and oil refining, should focus on eliminating outdated production capacity, optimizing industrial structure, and solving key core technological constraints. There are outstanding problems in green development and comprehensive utilization of resources.