Annual Report 2012

BUSINESS REVIEW AND PROSPECTS
BUSINESS REVIEW
The year 2012 saw decelerated growth globally,
a tepid recovery of the U.S. economy, as
well as the outbreak of European sovereign
debt crisis and a dramatic slowdown in the
growth of the emerging markets. Chinese
economy slowed down in the first half of the
year characterised by weak market demand.
With the Chinese government introducing and
strengthening macroeconomic control and
expediting structural adjustments, the Chinese
economy stabilized and then improved, with
a GDP growth of 7.8% for the year. Based on
analysis and projection on macro economy and
market trends, the Company achieved positive
results through proactive response to market
changes, expansion of resources and markets,
management improvement and cost reductions.
1 Market Review
(1) Crude oil market
In 2012, the price of international crude
oil fluctuated sharply within a wide
range. In the first quarter, the spot price
of Platts Brent crude oil rose to USD
128/barrel. The second quarter saw
a dramatic slump to USD 90/barrel,
after which the price rebounded rapidly
and fluctuated in an elevated range.
The annual average spot price of Platts
Brent crude oil was USD 111.6/barrel,
representing an increase of 0.3%
from 2011.
(2) Oil products market
In 2012, the Chinese government
made eight timely price adjustments
for gasoline and diesel, following the
international crude oil price trend, and
gradually narrowed the gap between
realized prices and the prices based
on pricing formula, relieving losses in
the refining sector. The increase in the
number of automobiles led to rapid
growth in domestic demand for gasoline.
The growth rate for diesel demand
declined because of a slowdown in the
economy. According to statistics, China’s
apparent consumption of domestic oil
products (including gasoline, diesel and
kerosene) was 251 million tonnes in
2012, representing an increase of 3.3%
from 2011.
Mr. Wang Tianpu, Vice Chairman and President
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CHINA PETROLEUM & CHEMICAL CORPORATION Annual Report 2012
Business Review and Prospects