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Industry body sees price and output up

CHINA'S petroleum and chemical industry has shown signs of recovery in the first two months, especially last month, with price and production rising for some products, an industry group said yesterday.

But the impact of the financial crisis remains, and the industry is still locked in a downward cycle, the China Petroleum and Chemical Industry Association said in a report.

The industry's gross production value totaled 761.7 billion yuan (US$111.5 billion) in the first two months, down 17 percent from a year earlier. It was 394.5 billion yuan last month, down 12.4 percent from a year earlier but up 7.4 percent from January. Last month's figure is better partly because of the timing of the week-long Spring Festival holiday, which fell in January this year and in February last year.

"There have been signs of recovery in the industry, but the general picture of a downward cycle hasn't changed that much," said the association. "It remains to be seen whether the situation could get better."

The view is echoed by Sinopec Group, China's top refiner and a leading petrochemical maker. It yesterday said its first-quarter performance could be better than expected as demand for fuel is recovering and after it posted "stable" profit growth in the first two months.

The market may be better in the second quarter, given an improving macro-economic environment and the rollout of the government's bailout package for the petrochemical industry, Sinopec said.

Production, prices and plant operating rates for certain products stopped falling last month as the government stimulus measures boosted demand, the association said.

But exports remain sluggish, the association said. The value of exports fell 23.7 percent in the first two months to 45.2 billion yuan. It said sectors like fertilizers and refining are struggling with overcapacity and poorer plant running rates.


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