(Bloomberg) – China’s annual profit fell 16% as demand slows, and China’s oil consumption may be close to its peak.
The country’s largest refinery net revenue fell from 58.3 billion yuan a year ago to 49 billion yuan ($6.8 billion) in 2024, the company said in a document on Sunday. Compared with the analyst’s estimate of 56.4 billion yuan.
The downturn reflects the company’s operational challenges, with oil utilization falling nationwide as the government pushes refineries to produce less fuel and more petrochemicals, while the boom in electric vehicles has affected consumption of diesel and gasoline. According to the International Energy Agency, road fuel demand is expected to decline this year.
Sinopec’s oil refining business’s operating profit fell 67% to RMB 6.71 billion.
Global oil prices fell by about 3% on average in 2024, and Brent extended the quarter as U.S. President Donald Trump pushed for the trade war and encouraged higher production. While the decline has reduced some of the costs of Chinese refineries, a contraction in the national real estate sector driven by importers has made processors reluctant to increase their operating rates.
Read: Reduced fuel production in China could undermine global oil demand
Meanwhile, the operating losses of the chemicals business increased by 66% from the same period last year to RMB 10 billion.
According to the government plan, China’s goal is to keep national oil production at about 200 million tons per year while increasing natural gas supply to enhance energy security. Nevertheless, the refining sector is expected to face extended capacity, resulting in the gradual phase-out of smaller, unprofitable processors and inflatable stations.
Sinopec’s peer CNOOC will report earnings on March 27, followed by Petrochina on March 30.
– With the assistance of Felix Tam and Tian Ying.
More stories like this are available Bloomberg.com
