BEIJING, August 30 (InfoChina) – Sinopec Shanghai Petrochemical (NYSE: SHI), a pillar subsidiary of China’s largest refiner Sinopec (NYSE: SNP), says that its financial performance will be “unoptimistic” in the second half.

The company says in a statement to the mainland’s stock market that the company’s refining cost is unlikely to fall as international crude prices will stay high or even reach new highs amid hedging fund, U.S. dollar depreciation and geopolitical factors.

       Domestically, demand for petrochemical products will slow down as the government’s macroeconomic control tightens, and the price rises of raw materials and railway freights will also increase the company’s cost.

       Industry experts believe that even if the government allows product prices to rise, the margin won’t be huge enough to catch up with crude price rises.

       According to the company’s interim report released on August 29, the company’s half-year operating profit is negative 179.7 million yuan and its net profit is negative 27.56 million yuan (by Chinese accounting standards), compared to last year’s corresponding positive 2.3 billion and 1.65 billion yuan respectively.

       The huge loss in the first half was mainly caused by spiked crude prices, said the company. In the first six months, the company spent 16.2 billion yuan on crude cost, a year-on-year rise of 22.68% and accounting for 70.64% of the company’s total cost of 22.93 billion yuan.