Sinopec Corp. is the largest producer and distributor of petrochemicals in China with petrochemical production sites located throughout China's eastern, central and southern areas featuring dynamic economy and strong market demand. It produces and distributes a great variety of petrochemical products, including intermediates, synthetic resin, synthetic fiber monomers and polymers, synthetic fiber, synthetic rubber and chemical fertilizer, etc. The Company integrates its petrochemical production with its refining business. Feedstock for petrochemical production including light hydrocarbon and some oil products (e.g. naphtha) is mainly supplied by the Company’s refining segment. In view of the robust demand of China's domestic market, the Company distributes most of its petrochemical products in domestic market.

By end 2008, the capacity, output and market share of the Company's major chemical products are as follows:

Sinopec Corp. has 10 ethylene plants (including 2 joint venture companies) with a total capacity of 6.145 million tpa by the end of 2008 and real production of 6.289 million tonnes. The utilization rate of ethylene plants reached 102.34%. Among them, 7 plants have built a capacity of over 0.6 million tpa for ethylene production, including Sinopec Shanghai Petrochemical Co., Ltd., Sinopec Beijing Yanshan Company, Sinopec Qilu Petrochemical Co., Ltd., Sinopec Yangzi Petrochemical Co., Ltd., BASF-YPC Co., Ltd., Shanghai Secco Petrochemical Co., Ltd. and Sinopec Maoming Company. The ethylene production capacity in Secco reaches 0.9 million tpa.

Sinopec Corp. has 26 synthetic resin plants with a total capacity of 9.336 million tpa. In 2007, the output of synthetic resin was 9.59 million tones, representing a domestic market share of 23.0%. The capacity of polyolefin (PE+PP) facilities for 5 major synthetic resin products reached 7.995million tpa. The output of polyolefin in 2008 was 8.351 million tonnes, with a domestic market share of 39.02%.

Sinopec Corp. has 5 synthetic rubber plants with a total production capacity of 0.85 million tpa. In 2008, 0.834 million tons of synthetic rubber were produced, acquiring 27.15% of the domestic market share.

Sinopec Corp. has 13 synthetic fiber monomers and polymers plants with a total capacity of 7.98 million tpa. In 2008, the output was 7.264 million tons, accounting for 22.63% of the domestic market share.

Sinopec Corp. has 8 synthetic fiber plants. The capacity of polyester fiber, acrylic fiber, polyamide fiber and polypropylene fiber totaled 1.753 million tpa. In 2008, the synthetic fiber production was 1.26 million tons and the domestic market share was 5.92%.
Sinopec Corp. has 6 urea plants with a total capacity of 3.13 million tpa.  The urea production in 2007 was 1.649 million tons, accounting for 3.17% of the domestic market.
2008 is an eventful year. In the second half of 2008, the financial crisis led to slump of the world economy and chemical cycle, which brought unfavorable conditions with the feature of increase first and decrease later for chemical production and operation. Chemical segment proactively addressed severe challenges brought by market changes, adhered to deciding production by sales and promoting sales by production, made every effort to optimizing units operation plan, optimizing resources, adjusting structure, reducing cost and stabilizing market.

Sinopec Chemical Products Sales Company, established in May 2005, is the largest specialized chemical products sales company in China. In 2008, on the basis of three regional companies in Beijing, Shanghai and Guangzhou, the Chemical Sales Company established Wuhan branch, and formally ran it. Network construction has thus started. Newly-built units pre-sales and self-conducted trade were stable, volume of the latter was increased by 25%. Construction of logistics storage infrastructure was stably advanced, logistics business played a more supportive role for sales.

Output of major chemical products (unit: 1,000 tonnes)

Product	2008	2007	2006	Changes in 2008 compared with 2007 (%)
Ethylene	6,289	6,534	6,163	-3.7
Synthetic resin	9,590	9,660	8,619	-0.7
Synthetic rubber	834	800	668	4.3
Synthetic fiber monomers & polymers	7,264	8,018	7,242	-9.4
Synthetic fiber	1,260	1,417	1,502	-11.1
Urea	1,649	1,565	1,609	5.4

In 2008, the Chemicals Segment's operating loss was RMB 13.1 billion, with a year-on-year decrease of RMB 26.4 billion.

Chemical Products

Sinopec Chemical Sales Company is the largest company specialized in chemical products sales. Four regional branches in Beijing, Shanghai, Guangzhou and Wuhan were respectively in charge of local marketing and sales. Main productions include synthetic resin, synthetic rubber, synthetic fiber monomers and polymers, and synthetic fiber, synthetic fiber material and organic chemical material, and so forth. In spite of negative influence brought by global financial crisis that started from the 2nd half of 2008, operation volume in the whole year totaled 21.12 million tons. Five major types of synthetic resins reached 7.58 million tons, synthetic rubber reached 0.88 million ton, synthetic fiber material 3.06 million tons, synthetic fiber polymers 1.49 million tons, synthetic fiber 1.26 million tons, and organic chemical and medium by-products 6.85 million tons.

Sinopec Chemical Sales Company always adhered to the concept of “competition, open-mind, discipline, prudency and integrity”£¬oriented by market, concentrated on clients, constantly improved marketing network, cultivated corporate brand. The Company actively served Sinopec production enterprises and downstream consumers, dedicated to providing high-quality product and service, and increased value via good service. The Company also actively dealt with international competition and adapted to chemical market cycle changes, jointly promoted sustainable, effective and sound development of the petrochemical industry.