China's Some Industries Signal Bottom in November 2008     

The Ministry of Industry and Information Technology on February 2nd, 2009 released the economic data for China's industrial sector for 2008.
   The Enterprises, which refer to all state-owned enterprises and non-state companies with annual sales of at least RMB5 million, saw gross production increased 12.9% in 2008 on yearly basis, after rising 18.5% in 2007.
   In breakdown, it rose 16.2%, 15.9%, 13% and 6.4% in each quarter 2008. In December 2008, gross production gained 5.7% year-on-year. The December growth reading was 0.3 percentage points higher than November's but 11.7 percentage points lower than that of the same month in 2007.
   The Enterprises' earnings declined with a rise of loss-making firms. In the first eleven months 2008, The Enterprises posted combined profits of RMB2.406 trillion, up 4.9% in annualized terms. In breakdown, profits rose 16.5% in the January-February period, 23.1% in March-May and 17.3% in June-August. However, it fell 26.2% in September-November. Unprofitable companies had combined loss of RMB487.9 billion, 1.8 times the year-earlier figure. The number of loss-making companies accounted for 18% of the total, against 14.4% in 2007.  

Chemical
In the chemical sector, production and earnings had risen stably in the first half of 2008 before earnings dropped in the second half amid falling product prices and factory operating rate. The sector's gross production rose 10% for the whole year, 10.7 percentage points lower than 2007' growth rate. Among major chemical products, output rose 1.4% and 6.4% respectively for caustic soda and soda ash, increased 1.4% and 12% for fertilizers and pesticides, but fell 2.1% for ethylene. In December, the sector's gross production rose 4.9%, reversing a 3% drop registered in November, with daily output of caustic soda, soda ash, fertilizers and pesticides bouncing back.
   The year-end market prices for major chemical products were 40%-70% below the intra-year high, but the trend of decline has eased in December. Natural rubber prices fell 20.6% in December after tumbling 23.9% in November. Polyvinyl chloride prices rose 7.7% in December month-on-month, after a 12.8% drop in November. The decline in prices for major inorganic chemical products has shown signs of easing while sulfuric acid prices kept plummeting. Prices for caustic soda and soda ash declined 5.8% and 0.04% in December from November. In the first eleven months 2008, the chemical industry realized profits of RMB149.8 billion, down 1.2% from a year earlier. This compared to a growth rate of 30.1% in the first eight months.

Steel
The steel industry maintained a fast while stable development in the first half of 2008, when product prices and corporate earnings both reached all-time highs. Steel prices plunged in the second half, leading to a reverse in operations and forcing 30% of domestic mills to reduce production. Crude steel production was up 1.1% to 500.49 million tons in 2008, slowing from 2007's growth rate of 15.7%. Steel product output rose 3.6% to 581.77 million tons, after rising 22.7% in 2007.

Construction Material
The overall operation in the construction materials sector was stable in 2008, with relatively fast growth in earnings. The industry's gross production rose 17.6% year-on-year for 2008, after rising 24.3% in 2007. Cement production rose 5.2% to 1.39 billion tons, and flat glass output gained 6.5% to 550 million boxes in 2008. Major construction material makers held 9.33 million tons of cement in stockpiles at the end of December, up 11.1%, and flat glass of 23.65 million boxes, up 20.2%.

Nonferrous Metal
In the nonferrous metals segment, product prices have tumbled in the second half 2008. Coupled with oversupply in capacity, companies have suffered serious loss. Gross production in the nonferrous metals industry climbed 12.7% in 2008, after rising 18.7% in 2007. Aluminum output rose 7.7% to 13.18 million tons in 2008, after surging 33.8% a year earlier. Alumina output gained 17.7% to 22.79 million tons, following a jump of 47.7% in 2007. The nonferrous sector's gross production rose 9.5% in December 2008 from a year earlier, quickening from November's on-year rate of 2.3%.

Light Industry
Production maintained relatively fast pace in the first eight months 2008 in the light industry, but earnings started to wane since September 2008 and exports posted negative growth since November. For whole 2008, gross production rose 14.3%, slowing from 2007's 18.8%. In the first eleven months 2008, the industry earned a profit of RMB383.1 billion, up 18.8%, versus a growth rate of 29.8% for the January-August period.

Textile
The textile industry suffered poorer earnings as the sluggish export market led to weak production. Gross production was up 10.3% in 2008, after rising 16.5% in 2007, while export value increased 4.7%, against 14.2% for the previous year. Chemical fiber production rose 2.3 percent to 24.05 million tons. In the first eleven months 2008, the textile industry had combined profits of RMB102.6 billion, down 0.7% on yearly basis. Profit had gained a 36.9% growth in 2007. Among them, profits rose 9.3% and 13% respectively for the textile and garment segments, while that plunged 74.9% for chemical fiber makers. About 20.4% of the textile companies were unprofitable, posting combined loss of RMB22.13 billion, a surge of 97.7% from a year earlier.

Pharmaceutical
Pharmaceutical companies registered a 17.4% growth in gross production for 2008, slightly down from 18.3% in 2007. They produced 2.29 million tons of pharmaceutical ingredients, 0.9% more. In the first eleven months 2008, the pharmaceutical sector had profit of RMB70.9 billion, up 28.4%.

Machinery
In the machinery manufacturing sector, The Enterprises saw gross production increased 17.1% in 2008, after rising 24.1% in 2007. In the January-November period 2008, the sector posted profit of RMB475.2 billion, up 16.2%. Profit declined 8.2% in the September-November period from a year earlier.

Auto
For the auto industry, its production and sales, which had risen 16.7% and 18.5% respectively in the first half 2008, fell 6.7% and 5.2% in the second. Production and sales went down 14.9% and 8.2% in the fourth quarter. Auto makes reduced production one after each other in the fourth quarter to relieve pressure on capital flow caused by the high-level car inventory. Car output rose 6.5% to 9.62 million units in 2008. Profits in the car-manufacturing sector rose 8.7% to RMB123.9 billion in the first 11 months.

Electronics
Gross production in the electronics industry was up 12% in 2008, against 18% in 2007. Export value gained 10.2%, down from 2007's 19.6%.

Coal
The coal industry registered multiple increases in earnings as the overall production condition remained stable. The tight supply situation has been eased since September 2008 as a result of declining demand from major customers such as power plants and steel mills, leading to a fall in coal prices. Raw coal output rose 12.8% to 2.62 billion tons in 2008, coal exports fell 14.6% to 45.43 million tons while imports dropped 20.8% to 40.4 million tons. The nation's raw coal output fell 1.3% in December 2008, after rising 5.2% in November. The coal industry had combined profits of RMB200 billion, up 130%.

Power
Electricity generation rose 5.5% to 3.4 trillion kWh, after a growth rate of 14.9% in 2007. In the first eleven months 2008, power firms posted profit of RMB28 billion, down 82.3%. Among them, 30.9% reported loss.

Petroleum
In the petroleum industry, crude oil production grew 2.3% to 189.73 million tons in 2008. Crude oil imports rose 9.6% to 178.8 million tons. Crude oil processing volume increas