Sinopec Expects China’s Fuel Demand Recovery to Pick Up Steam

According to Chief Financial Officer Shou Donghua, Sinopec, the largest refiner in the world by capacity, increased its refining profits in the first quarter by 17.5% year over year to $8.70 per barrel. With that increment, compared to the first three months of 2023, Sinopec Corp forecasts that China’s demand for diesel and gasoline would increase in the second quarter.

Vice President Huang Wensheng informed the media and investors that China’s apparent refined gasoline consumption had increased 6.7% year over year in the first quarter as the country’s economy was rebounding after Beijing removed COVID regulations.

As per Reuters reports, Sinopec’s first-quarter net income fell by 12% year over year as a result of lower global oil prices, according to company executives who spoke at the earnings briefing. However, improving refined margins, more gasoline sales, and higher natural gas prices helped to counterbalance this trend.

While domestic refined sales increased by 8.5% over the same period, Sinopec also profited from a lucrative export market, increasing fuel shipments by 112% year over year, according to Chief Financial Officer Shou. As Sinopec increased gasoline purchases from independent refiners by roughly 30%, Shou added, the company’s domestic fuel sales increased in contrast to a 3% fall in its crude runs.

Due to western sanctions, China’s independent refiners, often known as “teapots,” have benefited in recent years from inexpensive crude oil from Iran, Venezuela, and more lately, Russia, oil dealers and analysts said.

Privately owned Jiangsu Shenghong Petrochemical and PetroChina’s Guangdong Petrochemical, two recently opened refinery complexes, have added to the booming supplies of petrochemicals coming from mega-private refiner Zhejiang Petrochemical Corp and Hengli Petrochemical that began just a few years ago.

Vice President Huang stated without going into further detail that Sinopec, which also generates chemicals from coal and accounts for 10% of its chemicals sector, is moving forward with plans to invest in coal mines in Inner Mongolia, northern China.