Industrial profits shrink
( 2002-04-17 00:07 ) (1 )

The profits of China's petrochemical, metallurgical and non-ferrous industries shrank in the first quarter, largely due to a global price drop and an increase in the country's imports, the State Economic and Trade Commission said.

Most of China's key industries have shown better performance in the period, but some were characterized by consecutive declines in product prices and a surplus in market supply, the commission said at a news conference Tuesday.

Due to a large margin drop of global crude oil prices, the profits of China's petrochemical industry reduced by 10.8 billion yuan (US$1.3 billion) in the first two months of the year, as compared with the same period in 2001, said Ma Liqiang, director of the commission's Bureau for Economic Operation.

"This accounted for the overall downturn of China's whole industrial economic profits in the first quarter, which was 5.5 billion yuan (US$662 million) less than the January-March period last year,'' Ma said.

The dive of non-ferrous prices in the world market also had a fallout in China, where prices downed by 14.8 per cent, and profits dropped from 690 million yuan (US$83.1 million) in the first quarter last year to 250 million yuan (US$30.1 million) this year, he said.

Partly affected by increasing amounts of imports, China's rolled steels plummeted by 300 yuan (US$36.1) per ton on average, and profits plunged by 46.7 per cent in the January-March period, the latest statistics from the commission indicated.

On the other hand, the output growth of China's steel, cement and glass industries ranged between 13 per cent and 20.5 per cent in the first quarter, a momentum the commission feared may lead to further surplus in market supply.

Already, the oversupply of products have caused factory prices of most industrial products in February to drop by 4.2 per cent from the same period last year, Ma said.

High and new industries like electronics and pharmaceuticals, however, posted a rapid growth rate in output and export. Exports of electronics products, for example, increased by 31.1 per cent from last quarter, according to Ma.

Most industrial sectors are expected to maintain their sound performance in the second quarter of this year, given the gradual recovery of the global economy, China's increased investment in fixed assets and the steady growth of demands in the consumer market, he said.

In a related development, Xu Zhimin, another commission official, Tuesday said China's coal output hit 264 million tons in the first three months of this year, an increase of 16.4 per cent from the same period in 2001.

Coal export in the first quarter reached 18.02 million tons, a drop of 1.7 per cent, according to Xu.

The country will continue to shut down those small coal mines that are environmentally unsound and fail to meet the requirements of a safe workplace, Xu said.

(China Daily by Zhao Huanxin)