Wednesday, December 24, 2008

Sinopec's unit likely to post major loss

SINOPEC Shanghai Petrochemical Co, the nation's biggest ethylene maker, expects to post a ''substantial loss'' this year on a sharp fall in product prices as the global recession cuts demand.

Product prices have fallen more than 60 percent from their highs this year, the company said in a statement to Hong Kong's stock exchange yesterday. Sinopec Shanghai locked in oil costs and so isn't benefiting from the recent drop in crude prices, it said, according to Bloomberg News.

Fourth-quarter loss is expected to widen from the previous quarter as the global financial crisis curbed domestic demand and exports, the statement said. The cost of oil Sinopec Shanghai purchased in the third quarter at high prices will be reflected in the fourth quarter, it said.

The company reported a third-quarter loss of 2.31 billion yuan (US$338 million) on October 29, compared with a 94.1-million-yuan loss the same period a year earlier. Sinopec Shanghai has a profit of 1.59 billion yuan for 2007. The firm won't get refining subsidies from the government for the fourth quarter.

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