China’s Sinopec Group reported an 8.9% profit decline in the first quarter as rising raw material costs and increased competition hurt its petrochemical business, offsetting higher fuel sales and oil prices.
China Petroleum & Chemical Corp, the formal name of Sinopec, on Sunday reported a net profit of 18.32 billion yuan ($2.53 billion) between January and March, according to a filing with the Shanghai Stock Exchange citing Chinese accountants.
The refining giant said crude oil prices fluctuated upward and domestic demand for natural gas, refined petroleum products and petrochemicals increased from last year, but product gains in petrochemicals remained weak due to increased production capacity and rising raw material costs.
Sinopec, the world’s largest oil refiner by capacity, saw its crude oil throughput increase 1.7% in the first quarter from a year earlier, to 63.3 million tonnes, or 5.08 million tonnes per day.
Sales of refined fuels increased by 6.5% to 59.81 million tons.
Sinopec said production of ethylene, a key petrochemical component, fell 2% during the period, continuing a 7.2% year-on-year decline in the same period of 2023, as competition has increased.
Crude oil production rose 1.3 percent this year to 70.36 million barrels, while natural gas production rose 6 percent to 350.46 billion cubic feet.
Capital expenditures amounted to 20.5 billion yuan, up from 23.4 billion yuan a year earlier.
The company has allocated 13.5 billion yuan of capital expenditure to its exploration and development segment, mainly to build crude oil production capabilities in Jiyang and Tahe, natural gas production in western Sichuan, as well as LNG storage and transportation facilities in Longkou.
It will spend 4.1 billion yuan on refining projects.
Last month, Sinopec CEO Dong Zhao told energy conference CERAWeek that higher sales of electric cars would reduce demand for refined products in China by 20 million tons per year, without providing any timeline.
As a result, Sinopec is interested in new overseas markets and plans to build its first fully controlled refinery abroad in Sri Lanka, top industry sources said.
(tonnes = 7.3 barrels for crude oil conversion)
($1 = 7.2464 Chinese Yuan Renminbi)
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