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 its refineries. In view of the robust demand of China's domestic market, the Company distributes most of its petrochemical products in domestic market.

By end 2007, 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 end 2007 and real production of 6.534 million tonnes. The utilization rate of ethylene plants reached 106.33%. 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 24 synthetic resin plants with a total capacity of 8.849 million tpa. In 2007, the output of synthetic resin was 9.6598 million tones, representing a domestic market share of 23.02%. The capacity of polyolefin (PE+PP) facilities for 5 major synthetic resin products reached 7.780 million tpa. The output of polyolefin in 2007 was 8.879 million tonnes, with a domestic market share of 41.17%.

Sinopec Corp. has 13 synthetic fiber monomers and polymers plants with a total capacity of 7.5824 million tpa. In 2007, the output was 8.0182 million tonnes, accounting for 23.53% 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 1.7663 million tpa. In 2007, the synthetic fiber production was 1.417 million tonnes and the domestic market share was 6.38%.

Sinopec Corp. has 5 synthetic rubber plants with a total production capacity of 0.6763 million tpa. In 2007, 0.8002 million tonnes of synthetic rubber were produced, acquiring 22.56% of the domestic market share.

Sinopec Corp. has 6 urea plants with a total capacity of 3.61 million tpa.  The urea production in 2007 was 1.5646 million tonnes, accounting for 3.21% of the domestic market.

In 2007, confronted with sky-rocketing international oil price, tight control of domestic oil product price, serious cyclic and regional imbalance between demand and supply for chemical light feedstock as well as the rising cost of chemical products, Sinopec leveraged its integrated upstream and downstream business, tightly grasping market opportunities and tapping potential to increase market share. Remarkable results have been achieved in chemical production and operation with all indicators leading its domestic counterparts.

Sinopec Chemical Products Sales Company, established in May 2005, is the largest specialized chemical products sales company in China. In 2007 when the changing market situation became more complicated, Sinopec Chemical Products Sales Company took IT construction as its foundation and adopted a profit-focused strategy. The Company has intensified its market study and internal management, speeding up logistics system construction and gradually improving marketing service network. The Company has prominently enhanced its competitiveness of chemical products and improved its capability of overall planning and all-round consideration for both internal and external resources as well as the ability of market control.

Sinopec Maoming Company completed its ethylene expansion project in September 2006. Its ethylene capacity has been increased from 0.36 million tpa to 1 million tpa. With the incremental ethylene capacity, Sinopec has achieved a growing market share for chemical product with both product mix and profit further improved.

In 2007, Sinopec Corp.'s new ethylene downstream units, such as the 0.25 million tpa LDPE unit of Sinopec Maoming Company's Second Round Revamping Project, the 0.38 million tpa EG unit of Sinopec Shanghai Petrochemical Co., Ltd., the 50,000 tpa 1-hexene unit of Sinopec Beijing Yanshan Company and the 100,000 tpa JV SBR unit of Sinopec Yangzi Petrochemical Co., Ltd., were completed and put into production. As a result, the Company's total capacity of major petrochemicals has been further increased, which underpins its effort to increase chemical products market share, to adjust product mix and to improve profitability.

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

Product	2007	2006	2005	Changes in 2007 compared with 2006 (%)
Ethylene	6,534	6,163	5,319	6.0
Synthetic resin	9,660	8,619	7,605	12.1
Synthetic rubber	800	668	626	19.8
Synthetic fiber monomers & polymers	8,018	7,242	6,725	10.7
Synthetic fiber	1,417	1,502	1,570	(5.7)

In 2007, the Chemicals Segment's operating profit was RMB 13.3 billion, with a year-on-year decrease of RMB 1.2 billion.