Julius, thanks for the info. SHI's news release confirms that too.
I am going to post part of SHI's release below and make some highlights:
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Tuesday April 27, 11:19 am Eastern Time
Company Press Release
SOURCE: Shanghai Petrochemical Company Limited
Shanghai Petrochemical Announces 1998 Annual Results
HONG KONG, April 27 /PRNewswire/ -- Shanghai Petrochemical Company Limited (the ''Company'') (NYSE: SHI; HKSE: 338) today announced its audited results for the year ended 31 December 1998. Turnover for the year was RMB10,708.5 million, a decline of 9.5% compared with 1997. Net profit for the year was RMB237.1 million, representing a fall of 67.4% from 1997. Earnings per share declined 67.3% to RMB0.033 as compared to RMB0.101 in 1997.
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Mr. Lu pointed out, however, that the Company's results began to improve in the second half of the year, reflecting the PRC government efforts to increase infrastructure development, stimulate consumer demand and enlarge capital spending through a series of fiscal and monetary measures. Measures introduced by the government to reduce illegal imports and imports of petroleum products also started to take effect. These efforts helped stabilize market conditions and supported the beginning of a recovery of prices of major petrochemical products.
The second half of the year saw improvements in the industry environment and product prices which helped offset poor results of the Company in the first half of 1998, Mr. Lu said.
In 1998, the PRC government adjusted its crude oil pricing system. Effective June 1998, the PRC government announced that the domestic crude oil pricing system would be changed in order to align PRC domestic crude oil prices with international crude oil prices. China Petrochemical Corporation (''Sinopec'') also suspended its price equalization system from January 1 to June 30 and effective 1 July 1998 readjusted its price equalization system of crude oil to provide for a surcharge of RMB50 per tonne to be paid for the purchase of imported offshore oil, a surcharge of RMB30 per tonne for the purchase of Daqing oil and RMB20 per tonne for other onshore oil, as well as a reimbursement of RMB40 per tonne for oil purchased from Sinopec crude oil producers.
The new pricing system lowered the Company's average cost of crude oil from RMB1,006 per tonne in the first half of the year to RMB937 per tonne in the second half. The average cost per tonne for the year was RMB970, down RMB149 compared with 1997.
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In 1998, the Company's capital expenditure projects progressed smoothly, enabling the Company to raise the production capacity of various plants. ...
Commenting on the current state of China's petrochemical industry, Mr. Lu said: ''The industry has remained at the bottom of a cyclical downturn for a relatively long period of time and has experienced substantial price declines for the majority of petrochemical products. The petrochemical industry is still facing a difficult period ahead. Looking ahead, we believe that the operating environment for the Company will improve as the PRC government's measures to encourage domestic demand and reduce on illegal imports continues to be implemented.
''While the Company does not anticipate the domestic market to rebound significantly, further deterioration is unlikely. In this environment we expect our operating environment to improve gradually,'' Mr. Lu said.
The full text of the Company's formal announcement of annual results can be accessed through the Internet at: irasia.com.
SOURCE: Shanghai Petrochemical Company Limited
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