H-share petrochemical stocks plunged yesterday on concerns over a resurgence in smuggling and dumping which have sent product prices lower. Shanghai Petrochemical took the brunt of the beating, dropping nine cents, or 11 per cent, to 72 cents. Yizheng Chemical Fibre dropped five cents, or 7 per cent, to 65 cents, while Beijing Yanhua was down seven cents, or 9 per cent, to 71 cents. Prices of most petrochemical products started to retreat last month, having risen after Beijing launched an anti-smuggling drive in July. Salomon Smith Barney Asia-Pacific vice-president Janet Yang said: 'I believe 1999 will be challenging for the sector, but I expect a mild improvement in 2000.' She said product prices would remain suppressed by additional production capacity coming on stream in the first half of next year, while demand would recover only in 2000. Ms Yang said Yizheng and Yanhua would be hardest hit by smuggling as their main products - polyester fibre and plastics - were easy to import illegally. According to Yizheng's December quotation, prices of its polyester products roughly stayed at last month's levels, but retreated from their highs in September and October. Prices are still slightly above those before the anti-smuggling campaign. Mainland chemical-fibre companies are stepping up efforts to halt the slide in product prices. Yizheng and Shanghai Petrochemical are among 17 mainland chemical fibre enterprises which have jointly petitioned the State Economic and Trade Commission to take action against smuggling and dumping as well as regulate export processing factories.
