Economic performance of the petroleum and chemical industry in 2013

**Abstract** In 2013, as the global economy slowly recovered and domestic growth slowed, China's oil and chemical industry maintained a generally stable performance. Production growth accelerated, and overall efficiency improved. The industry continued its transformation and upgrading, but faced increasing downward pressure, with several underlying issues and contradictions becoming more evident. **I. Analysis of Industry Operations in 2013** **(1) Stable Overall Economic Performance** Throughout the year, the added value of the petroleum and chemical industry increased by 8% year-on-year, contributing 13.23% to the national industrial output. The chemical sector alone accounted for 12.2%. Total revenue reached 12.94 trillion yuan, up 8.94%, with the chemical industry generating 8.11 trillion yuan, a 12.88% increase. Profit totaled 840.27 billion yuan, rising 5.64%, with the chemical industry reporting 433.99 billion yuan, up 12.23%. Compared to the previous year, this marked a significant improvement. Additionally, the number of loss-making enterprises dropped by 0.43%, while total losses decreased by 12.53%. **(2) Steady Growth in Product Output** From January to December, crude oil output reached 208 million tons, up 1.65% from the previous year. Crude oil processing volume rose to 479 million tons, an increase of 3.31%. Natural gas production reached 112.94 billion cubic meters, up 9.1%. Other key products saw notable increases: caustic soda at 28.542 million tons (6.6%), soda ash at 24.293 million tons (0.6%), calcium carbide at 22.324 million tons (16.2%), ethylene at 16.22 million tons (8.5%), and fertilizers at 71.536 million tons (4.9%). Nitrogen and potassium fertilizers grew by 5.9% and 16.3%, respectively, while phosphate fertilizer declined by 1.4%. Pesticide output increased by 1.6%, plastics by 11%, synthetic fiber monomers by 4.7%, and tire casings by 7.2%. **(3) Improved Efficiency in the Chemical Sector** Profit from basic chemical raw materials reached 94.31 billion yuan, a 18.7% increase year-on-year. Inorganic acids, alkalis, and salts showed strong growth, with year-on-year increases of 21.2% and 88.8%, respectively. Organic chemical raw materials, pesticides, rubber products, and specialty chemicals also performed well, with profits of 56.89 billion, 22.93 billion, 59.31 billion, and 112.01 billion yuan, respectively, growing by 26.8%, 30.8%, 21.9%, and 16.2%. However, fertilizer manufacturing remained in decline, with profit dropping 19.2%, particularly in nitrogen, phosphate, and potash sectors, which fell by 51.4%, 30.9%, and 46.4% respectively. **(4) Import and Export Growth Remains Steady** The total import and export volume of the petroleum and chemical industry reached 641.4 billion U.S. dollars, up 2.6% year-on-year. The trade deficit was 289.89 billion U.S. dollars, down 0.15%. Imports totaled 465.65 billion U.S. dollars, up 1.7%, including 282 million tons of crude oil, up 4.1%. Exports reached 175.76 billion U.S. dollars, up 5%, with the chemical industry exporting 145.84 billion U.S. dollars, a 4.2% increase. Rubber products exports rose 9.2%, accounting for 27.2% of the industry. Pesticides and synthetic fiber polymers increased by 31% and 27.3%, respectively. Fertilizer exports, however, fell by 14.1%. **(5) Continued Optimization of Investment Structure** Fixed asset investment in the petroleum and chemical industry reached 2.0 trillion yuan, up 19.1% year-on-year. New projects totaled 11,720, a 3% increase. The chemical industry invested 1.41 trillion yuan, up 14.6%. Investments in synthetic resin, coatings, pesticides, and organic chemicals rose significantly, exceeding the industry average. Meanwhile, investments in overcapacity sectors like inorganic acids and phosphate fertilizers declined. **(6) Further Improvement in Economic Growth Structure** The share of resource-based products declined, while technical products increased. The chemical industry’s main business income accounted for 62.7% of the total, up 3 percentage points. Organic chemicals, rubber products, and specialty chemicals made up 13.1%, 13.7%, and 25.8%, respectively. In contrast, inorganic chemicals and fertilizers saw declines of 0.94% and 3.9%. Breakthroughs in advanced technologies such as trans-isoamyl rubber and large-scale coal gasifiers were achieved, and high-end materials outperformed the industry average. **II. Outstanding Challenges Facing the Industry** **(1) Overcapacity in Certain Sectors** Overcapacity remains a critical issue in traditional chemical industries, with low utilization rates and weak market competition. Methanol, PVC, caustic soda, and urea operated at 60%, 65%, 75%, and 80% capacity, respectively. Prices for methanol and PVC remained low, while caustic soda and urea prices fell by 18.4% and 13.4%. Some new chemical materials also experienced overinvestment after technological breakthroughs. **(2) Rising Operating Costs** Despite lower coal prices, labor, electricity, transportation, and environmental costs increased, leading to higher overall industry costs. Main business costs reached 10.8 trillion yuan, up 9.9%, outpacing revenue growth. The cost per 100 yuan of revenue in the chemical industry rose by 0.41 yuan, surpassing the national average. Profit growth lagged behind revenue growth by 3.3% and 0.6%, respectively. **(3) Limited Self-Sufficiency in High-End Products** High-end chemical materials and specialty chemicals remain in the R&D stage, with limited application. For example, carbon fiber is still costly due to imperfect technology, and high-performance grades require further industrialization. Engineering plastics face challenges in cost and quality compared to foreign competitors. Insufficient investment and delayed product development hinder progress. **(4) Challenging Safety and Environmental Conditions** Environmental and safety concerns intensified in 2013. Public awareness of environmental protection led to increased scrutiny of chemical projects, with local resistance becoming a major obstacle. Many hazardous chemical plants are now surrounded by residential areas, requiring relocation. However, chemical parks suffer from overcrowding, poor layout, and low management standards, posing potential risks. **III. Outlook for 2014** Globally, economic growth is expected to stabilize and improve. Domestically, reforms and urbanization will create new opportunities for the petrochemical industry. However, deep-seated issues remain, including overcapacity, high costs, fierce competition, and ongoing safety and environmental pressures. Despite these challenges, demand for key products is expected to grow moderately, and overall prices should remain stable or rebound slightly. **IV. Key Work in 2014** In 2014, the industry will focus on improving planning, policy, and standards to guide sustainable development. Efforts will be made to enhance the competitiveness of key products like PX and MDI, strengthen fertilizer and pesticide regulation, promote new materials, and ensure safe chemical management. These steps aim to support the industry’s long-term stability and growth.

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