Shenyang Chemical: Profits Grow Steadily     

Shenyang Chemical Industry Co., Ltd (Shenyang Chemical, SZ: 000698), located in Shenyang municipality of northeastern China, was listed on the Shenzhen Stock Exchange in February 1997. Shenyang Chemical's largest shareholder is Shenyang Chemical Industry Group, holding 33.08% equity. Shenyang Chemical's business has three sections:
    * An oil refinery, mainly producing gasoline, diesel oil, liquid paraffin and liquefied petroleum gas (LPG)
    * The chlor-alkali processes, including PVC paste resin, caustic soda and fumed silica
    * The propylene industry chain which principally produces propylene, acrylic acid, acrylate ester, and polyether.

The company currently has a 500 000 t/a deep catalytic cracking (DCC) unit for processing heavy residue, a 130 000 t/a PVC paste resin unit, a 130 000 t/a acrylic acid and acrylic ester project, a 190 000 t/a caustic soda unit, a crude atmospheric and a vacuum distillation unit of 700 000 t/a processing capacity, which has been closed at most time since the second quarter of 2008 because of refinery losses caused by the high crude price.
   In 2007, the company produced 188 000 tons of caustic soda, 126 000 tons of PVC resin paste, 170 000 tons of acrylic ester, and processed 576 000 tons of crude oil; net profit was RMB154.44 million, an increase of 51.37% over 2006. The profit was mainly from chlor-alkali and acrylic ester, occupying above 80% of the company's main business profits. In the first half of 2008, Shenyang Chemical earned a net profit of RMB166.78 million, an increase of 102.14% over the same period of 2006. (CCR2008 No.17) Net profit has surged mainly because an acrylic ester project of Shenyang Paraffin Chemical Co., Ltd. (Shenyang Paraffin), in which 100% equity rights were purchased by Shenyang chemical, (CCR2007 No.7) was in the testing phase at the same period in 2007. While sales volume, income and profit in the first half of 2008 increased, pushed up by the increased capacity usage rate of the project in 2008.

Chlor-alkali business is the stable profits source   

Shenyang Chemical's largest primary income is from PVC paste resin and the gross profit rate of PVC paste resin has ranged between 24% and 32% in recent years. Compared to other domestic enterprises, PVC paste resin business in Shenyang Chemical has several advantages. Scale advantages: The company's PVC paste resin capacity has reached 130 000 t/a, after four capacity expansion revamps. The company plans to construct another 300 000 t/a PVC paste resin in the future. Low-cost advantages: At present, the production cost of PVC paste resin using the calcium carbide acetylene method is about RMB1 500 per ton lower than using ethylene process. Shenyang Chemical uses the calcium carbide acetylene method to produce paste resin based on the rich resources of calcium carbide in northeastern China, where the company is located. Technology superiority: Shenyang Chemical is the only company to master hand production technology of glove materials in China.
    In addition, Shenyang Chemical can produce 190 000 t/a of caustic soda - 100 000 tons by the diaphragm process, and the rest using suspended ion method. A thorough transformation from the diaphragm caustic soda production process to the modified diaphragm and expanded anode caustic soda production process in Shenyang Chemical was completed in 2004, and the latter can contribute RMB10 million more for each ton of caustic soda produced than the older process.

Acrylic ester projects promote profit growth   

Shenyang Chemical's acrylic ester unit was constructed in April 2004 (CCR2004 No.25) and commissioned in May 2007. In 2007, the company produced 100 000 tons of acrylic acid and ester and earned a business income of RMB1.123 billion.
    Compared with its main domestic competitors such as BASF-YPC Company Limited (BASF-YPC), Formosa Acrylic Esters (Ningbo) Co., Ltd. (Formosa Acrylic Esters), Beijing Dongfang Petrochemical Industry Co., Ltd., Shanghai Huayi Acrylic Acid Co., Ltd., Shenyang Chemical's acrylic acid project has several advantages: The raw material of acrylic acid is self-sufficient. At present, the cost of propylene accounts for 70%-80% of the acrylic acid production cost. Shenyang Paraffin's 500 000 t/a DCC heavy oil unit produces 60 000 tons of propylene per year that can be transported directly to the acrylic acid and ester process units as raw material. That can save costs of transport and feedstock production. Preceded by Formosa Acrylic Esters and BASF-YPC, Shenyang Chemical's single acrylic device is the third largest in China. The company adopted efficient technology that uses only 0.69-0.71 tons of propylene to make a ton of acrylic acid, less than BASF-YPC. Parts of Shenyang Chemical's acrylic operation use - the original facilities of Shenyang Paraffin so as to reduce fixed assets investment.
    Shenyang Chemical is constructing general reform on two units - a 500 000 t/a unit for making ethylene through catalytic pyrolysis liberating, and a 200 000 t/a polyethylene (PE), which was constructed in 2006. (CCR2006 No.6) This project has a total investment of RMB 257 600 and is scheduled to be finished in October 2008. Along with the commissioned acrylic acid and esters project, polyethylene projects and the steady operation of the CPP (catalytic pyrolysis process) installment in the future, Shenyang Chemical's products chain will take another step toward perfection and the company will be more competitive.