(Yicai Global) Oct. 31 -- China's chemical industry players have reported a bump in third-quarter earnings on the back of rising product prices following capacity reductions and improved environmental controls in the country. The positive results could lead to greater investments in the sector going forward.

Larger chemical firms performed well according to the earnings reports. Liaoning-based Jinhang Technology posted a 188 percent rise in net profit to CNY120 million (USD17.6 million) for the first nine months, while state-owned Huayi Group's net turnover more than quadrupled annually to CNY1.6 billion (USD230 million).

Smaller chemical firms have also reported steady growth. Net income at Tond Chemical in Shanxi province grew by three-quarters to CNY116 million in the nine months while that of Lanhua Sci-Tech Venture increased by one-third to CNY988 million as well.

Germany's BASF, the largest chemical producer globally, posted an annual rise of eight percent in its sales during this year's third quarter to reach EUR15.6 billion (USD17.7 billion), mainly due to product price hikes in all of its business sectors.

Various chemical giants are preparing to expand investment in China as they see performance improving and they look to take advantage of the growth potential within the local market. China's state-owned energy giant Sinopec has agreed on a deal with BASF to build an additional steam cracker at the pair's joint venture production base in Nanjing, capital of Jiangsu province in the east of the country.

The continuous good performance of the industry has not only attracted the eyes of foreign giants but is also reflected in the public market as well.

10 of the 44 Chinese companies to have attracted large-scale funding from qualified foreign institutional investors are from the chemical sector, followed by electronics with four and pharmaceutical biotechnology, building materials and building decoration, each with three, data from Shanghai securities firm Shenwan Hongyuan Group shows.

'The current chemical industry is quite prosperous, especially when stimulated by supply-side reform, the continuous upward trend in products' selling prices and other relevant factors," one analyst said.

Editor: William Clegg