The company made profit again in August making it the fourth month of continual profit since May 2014. Refining benefit slipped a lot in August due to significant price drop of fuel product oil and naphtha following the sharp reduction of crude price in market on top of trivial reduction of crude processed price because of crude inventory impact.

     The continual profit in August was very inspiring considering the negative market situation with impact from crude price and fuel product oil price at the same time. The good performance of various key focus areas contributed to such business result. The site-wide EII was reduced to record low of 79.6 while the output of ethylene and poly-olefin reached record high, and aromatics complex maintained a good trend of profitability, as a result of focus on reliability/gross margin improvement/BT fine operation throughout the company at all levels. The greatest news was that operators managed to control gross margin and operating expense via KMV/KEV labor competition among shift teams with everyone caring about the company profit improvement and focusing on scientific development of the company.

The price of fuel product oil and chemical products continued to drop following the continual reduction of crude price, which brought about a tough challenge to us. The average product sales price in September dramatically declined in comparison with that in August. In consequence, price was still an impact taking into account of crude and product factors. According to the latest forecast, product and raw material structural improvement in September will increase gross margin by more than RMB 40M. We can’t control the market but we are able to well manage what is within our control. As long as we stabilize production, maintain operation of chemical units/HCU/Aromatics etc. at maximum capacity and further optimize product structure, we will absolutely be able to cope with severe challenge of market and get through difficulties.

    We need to take a calm view of crude price drop. The chemical market at present still shows a pretty good momentum. Since June FREP chemical performance has ranked top number one or two in SINOPEC group and the company competiveness is being improved continuously. The impact from crude price drop is tentative. As long as crude price gets stable, refining performance will turn around with low-price crude into our inventory. Higher price for higher quality of diesel to take effective in October after quality upgrading to GBIV is in more favor of the company with additional benefit of around RMB 50M per month hopefully if 200KT road diesel is lifted as expected. In addition, start-up of DAU deep cut project and asphalt marine transportation project at end of this year will bring additional gross margin to the company.

     The Office of Presidents and company management have strategically planned a roadmap for gross margin improvement to continuously increase competitiveness. As long as every employee is pulled together sparing no efforts to optimize operation, improve mechanical reliability, stabilize production, further reduce flaring loss and unplanned shutdown, for sure FREP will get through the difficulty and continue to make profit!