Chinese state-owned petrochemicals giant Sinopec (Beijing; www.sinopec.com) has reported a 24% year-on-year fall in operating profit to CNY 73.5 bn (EUR 10.8 bn) in 2014. Turnover in the year was down 2% at CNY 2,826 bn, due mainly to price declines in petrochemical products and crude oil. The company said that during the year the global economic recovery had remained weak, while China’s economic growth was 7.4%. The year saw fluctuations in crude oil prices, with a precipitous drop in the fourth quarter.

Sinopec’s chemicals segment experienced low pricing during the year in severe market conditions. The business recorded a CNY 2.2 bn loss, but the company said it had been operating profitably since the third quarter of 2014. Sales were CNY 427 bn, down 2.3% year-on-year, attributable mainly to the drop in chemical product prices.

The company reduced its feedstock costs by increasing the light feedstock ratio, adjusted its product mix, and strengthened efforts in research and development, production, and sales of new products. It continued to optimise its manufacturing operations, adjusted utilisation rates, and shut down facilities with unsatisfactory marginal costs. Ethylene output was up by 7.2% compared with 2013 at 10.7m t and full-year chemical sales volumes rose by 4.4% to 60.8m t, thanks to inventory control and adjusted marketing strategy.

During the year, in chemicals R&D, the company brought online a demonstration plant for converting syngas to ethylene glycol, marking a breakthrough in coal chemical technologies. It commissioned a demonstration plant for “super-imitation-cotton” fibre technologies and developed bacteria-resistant PP and PP for low-temperature packaging.

Looking forward, Sinopec said it will further adjust its feedstock mix in its chemicals business to reduce costs, adjust its product mix to increase the production of high value-added products, and integrate manufacturing, marketing and R&D. In 2015, it plans to produce 10.9m t of ethylene.

Fu Chengyu, Sinopec chairman, said: “Under the severe market conditions of 2014, Sinopec focused on growth quality and efficiency, achieving safe and stable production. We effectively controlled the cost of each segment and maintained favourable growth momentum through adjustment and improvement in our business and product structure... We will maintain our strategy with innovation at the core in order to transform Sinopec to a scientific and services based company, and gradually shift the industry structure from 'petrol and chemicals' to 'energy and materials'.”