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Sinopec profits decline 9.4% in third quarter | Sinopec profits decline 9.4% in third quarter |
(about 1 hour later) | |
China Petroleum & Chemical Corp (Sinopec) Asia's largest refiner, has posted a decline in profits, as demand for petrochemicals suffered in China's slowing economy. | |
The company saw its net profits drop 9.4% to 18.3bn yuan ($2.92bn; £1.82bn) in the three months to 30 September from 20.2bn yuan a year earlier. | |
The higher cost of crude oil also hurt Sinopec's refining margins. | |
China's economic growth has slowed for seven straight quarters. | |
"In light of the market situation, we have actively lowered the operation utilisation of our chemical facilities," Sinopec said. | |
Analysts said Sinopec's petrochemical business swung to a loss in the July to September period. | |
In its earnings report to the Hong Kong Stock Exchange, Sinopec said output of ethylene, used to make plastic, decreased 4.5% to 7.02 million tonnes in the first nine months of the year. | |
Synthetic resin production also fell 1.1% to 9.96 million tonnes. | |
That has offset the benefit to the refiners from the recent rises in gasoline and diesel prices. | |
China's government tightly controls the cost of fuel to keep inflation in check. | China's government tightly controls the cost of fuel to keep inflation in check. |
The fuel-pricing system prevents companies from fully passing the higher crude costs on to customers. | |
In September, China's government allowed a 6.1-6.5% rise in the price of refined petroleum products to reflect higher global oil prices. | In September, China's government allowed a 6.1-6.5% rise in the price of refined petroleum products to reflect higher global oil prices. |
Analysts said that if inflation stays low the government could have greater flexibility to raise fuel prices again, which would benefit refiners such as Sinopec. |
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