1. What is the Company's judgment upon the price of crude oil, gross profit of oil refining operation, and chemical cycle in year 2004?
Holistically, crude oil price will remain on a high side further still. It is estimated that the average price of Brent crude oil in 2004 will turn out betthe companyen US$ 27~28 dollars/barrel, slightly down from that in 2003. Crude oil price perches on a high side, not least because of the growing demands in the global market, limited production output of OPEC, slump of US dollar, slow recovery of Iraq's exporting of crude oil, limited increment of crude oil production output of non-OPEC countries, relatively low inventory levels of crude oil and finished oil products in major the companystern countries, and the turmoil in Venezuela’s political scene, etc.
Gross profit of oil refining worldwide is rising, on the whole. Previously, the oil refining capacity in the global market (in Asia in particular) was heavily overdeveloped, thus the gross profit rate of oil refining always remained on a low side. Besides, as stricter requirements have been brought forward towards the quality standard and environment-friendly performance of oil products, the newly added capacity in the oil refining sector has not been able to meet the demands. In recent years, as demands have been surging up, the gross profit rate of oil refining worldwide has improved progressively; for instance, in 2003, the gross profit rate of oil refining in the global market has reached the second record high, during the past 15 years. It is predicted that in the ensuing 2 years, the growth rate of demands will turn out twice that of the newly added production output, and the gross profit of oil refining in the international market will still remain on a high level. It is estimated that the company's gross profit rate of oil refining will be US$ 4 dollars/barrel or so in 2004.
As the growth rate of global demands for chemical products has turned out even quicker than that of newly established production output worldwide (as estimated by CMAI, the growth rate of global demands for chemical products was 1.2 times that of the world's GDP; in this way, if the world’s GDP is to grow by 3.5% in 2004, then the demands for chemical products are to grow by 4.2%, namely up by 4.2 million tons. In fact, it was lately known that the production output of ethylene has been enhanced by less than 2%, i.e. presenting an added production output of only 1.14 million tons); the load rate of chemical facilities worldwide is going to climb up constantly (the load rate was betthe companyen 87~88% in 2003, and is expected to reach 91% in 2004). The chemicals industry of the day features good business conditions. It is estimated that the Chemicals Segment of the company is to register higher economic results.