The Group’s chemical production business experienced both hardships and harvests in 2009. The increasingly apparent impact of financial crisis on real economy caused the sharp decrease of market demand and low price of the products in the first quarter, which in turn caused the extended shutdown of some facilities in quite several ethylene subsidiaries. In face of the tough situation, the Group adopted the market-oriented and profit-centered strategy and sought to constantly optimize the corporate governance by intensifying its management, tapping its potentials, improving its services and expanding the total output. Our meticulous and effective efforts helped us stand the test of the hardships and scored sound progress at all fronts with the whole year operation performance rising by a large margin over the previous year.

Expanding the market and the total output. In face of the tough chemical market situation in Q1 of 2009, the Group strived for market expansion as well as total output expansion by adopting the flexible operation strategy. The total ethylene output of the year was 6.713 million tons, up 5.6% year on year. The output of synthetic resin, synthetic rubber, synthetic fiber raw material, synthetic fiber polymers, synthetic fiber and urea was up 6.5%, 8.3%, 7.3%, 14.2%, 3.1%, and 6.3% year on year respectively. The output of ethylene, synthetic resin, synthetic rubber and synthetic fiber polymers hit the record high. The Group maintained its position of the largest domestic producer and seller for the major chemical products by remaining the top player in terms of both capacity and output within China.

Optimizing the production and operation in order to maximize the profits. The Group made timely adjustment and optimization of the production according to the changes in market. It sought to give full play to the advantages of the concentrated management and production-sales-research integration so as to optimize the production pattern and promote coordinated labor distribution among subsidiaries and facilities. The Group also made efforts in cultivating locomotive products by raising the quality and capacity of product varieties with high added value according to the process characteristics of the facilities in different subsidiaries while attaining the goal of cost reduction by arranging production in the subsidiaries geographically close to the market demand according to the consumption structure in regional markets.

Light hydrocarbon and LPG played important roles in supplying the ethylene raw materials and optimizing the ethylene raw material mix in the context of rapid expansion of ethylene and aromatics capacity. In 2009, the Group’s ethylene subsidiaries conducted adaptive revamping to their cracking furnaces by adding or improving their receiving and storage facilities which caused the increase of the use of light hydrocarbon and LPG as premium ethylene raw materials to 1.19 million tons for the whole year.