The petrochemical industry is expected to report better earnings numbers in the second half of the year.
The recovery in China's petrochemical industry slowed last month due to weak demand, said an industry association yesterday.
The oil and gas exploration and oil refining sectors have seen solid recovery in July, but the rebound in the chemical industry has slowed down, China Petroleum and Chemical Industry Association (CPCIA) said in its monthly report.
"Weak demand is the main reason for the slowdown in the industry, while there still exists overcapacity in some sectors like fertilizers," CPCIA said.
In July, the total revenue of the petrochemical industry stood at 571.4 billion yuan, down 3.7 percent from June, said the report.
This is also the first month-on-month drop in the industry this year.
Analysts said along with the country's stimulus package for the petrochemical industry, companies in the industry would see better performance in the second half.
"The stimulus package has already taken effect in the industry by improving the investment environment," said Liu Gu, analyst, Guotai Junan Securities.
China approved a stimulus package for the country's petrochemical industry on Feb 19. The country will speed up construction of some large-scale oil refining and ethylene projects as part of the package.
The country will also build three or four oil refining bases in the Pearl River Delta, Yangtze River Delta and Bohai Sea-rim economic zone. The oil refining bases will have a minimum refining capacity of 20 million tons each.