Sinopec Shanghai Petrochemicals lost between RMB600m and RMB700m in its oil refining business in the first quarter alone, Trading Markets reports.
Chairman Rong Guangdao said the company faces a "predicament that
China's whole petrochemical industry is in," as the refining business
of "almost all Chinese petrochemical companies" are losing money due to
high international crude oil prices.
The government subsidised Sinopec Shanghai Petrochemicals with RMB247m
in the first quarter, or about 40 per cent of the company's reported
loss. Rong said the way out of this miserable situation is to expand
and modernise its ethylene facility by quadrupling production from
150,000 tonnes to 600,000 tonnes. This investment would require RMB9
bn, of which Sinopec Shanghai can finance RMB3 bn and would have to apply for bank loans for the remainder.
The company said it has to cut jobs and spin off non-productive business units to control costs.
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