SINOPEC held a corporate briefing today, where General Manager Chen Yingjun stated that the company's petrochemical business, including CPL (caprolactam), is seeing price increases due to the US-Iran conflict. In the second quarter, CPL prices are expected to surge to USD 2,000 per ton, reaching a recent high, and he is optimistic that the core business operations will likely recover from the bottom in 2025.

Chen Yingjun mentioned that in 2025, SINOPEC's core business will face three major headwinds, including the expansion of China Petrochemical's production capacity, leading to an oversupply in the market, and the implementation of reciprocal tariffs by the United States in April last year, which has caused a shrink in market demand. Additionally, due to exchange rate fluctuations, SINOPEC reported a net loss attributable to the parent company of NT$2.966 billion last year, marking its worst performance in recent years, symbolizing a net operating loss of NT$3.567 billion in its core business.

Chen Yingjun revealed that as Chinese CPL manufacturers have reduced their operating rates this year, the overall supply has decreased, driving prices up. Coupled with the US-Iran war further pushing up petrochemical prices, some of SINOPEC's products have already turned profitable in the first quarter of this year.

Chen Yingjun is optimistic that the prices of SINOPEC's main products, including CPL and AN (acrylonitrile), will continue to rise, with CPL prices in the second quarter expected to break the USD 2,000 per ton mark, reaching a recent high.

In contrast, on the raw material side, SINOPEC's main upstream raw materials include propylene, benzene, phenol, and liquid ammonia, which have also surged due to the Middle Eastern conflict. However, Chen Yingjun believes that as the US-Iran conflict gradually eases, if the Strait of Hormuz is reopened, there is a chance for a downward trend in raw material prices, which would help SINOPEC improve its product margins.

Chen Yingjun emphasized that due to the conflict, there has been significant volatility in both product and raw material prices recently. SINOPEC will adhere to the principle of "maintaining profit through product pricing" as its highest guiding principle, linking product pricing to costs, hoping to reverse the trend of losses in its core business.

Regarding external matters, SINOPEC's subsidiary Dingyue Development has been involved in the Jinghua City scandal, leading to the seizure of the land for Jinghua Plaza. Chen Yingjun stated today that they will continue to develop response plans through legal procedures to protect shareholder interests.

Last week, SINOPEC and Dingyue's board of directors decided to authorize the company's chairman or his authorized person to actively communicate and coordinate with relevant external parties based on a 728% floor area ratio, initiating the land disposal plan for Jinghua Plaza.

Chen Yingjun stated that they will rigorously execute according to laws and procedures moving forward, emphasizing that this is the most responsible strategic choice for the company and its shareholders at present, as obtaining funds can enhance operational capital and repay loans from financial institutions