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Q1 fuel demand up 6.7% yr/yr
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Q1 refining margin $8.7/bbl; fuel exports up 112% yr/yr
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Chemicals arm faces rival supplies, slow demand recovery
(Adds details on refining margins, fuel export, chemicals
business outlook)
By Chen Aizhu
SINGAPORE, April 28 (Reuters) - Refining giant Sinopec
Corp sees China's diesel and gasoline demand growing
more in the second quarter than in the first three months of
2023, a trend set to bolster the firm's profitability further
this year.
Vice President Huang Wensheng told investors and media that China's apparent refined fuel consumption had expanded 6.7% on the year in the first quarter with the economy recovering following Beijing's removal of COVID controls.
Improving refined margins, expanded fuel sales as well as higher natural gas prices helped offset downward pressure from lower global oil prices that led to a 12% year-on-year decline in Sinopec's first-quarter net income, company executives said at the earnings briefing.
Sinopec, the world's largest refiner by capacity, recorded 17.5% year-on-year growth in refining margins in the first quarter to $8.70 a barrel, Chief Financial Officer Shou Donghua said. While domestic refined sales expanded 8.5% during the period, Sinopec also cashed in on a lucrative export market raising fuel exports by 112% on the year, Shou added.
The growth in domestic fuel sales contrasted with a 3% decline in its crude runs, as Sinopec stepped up buying fuel from independent refiners by nearly 30%, Shou said.
Chinese independent refiners, also known as teapots, have benefited over the past few years from discounted crude oil from Iran, Venezuela and more recently Russia amid western sanctions, oil traders and analysts said.
Sinopec's chemicals department remained under pressure
from competing new supplies and a tepid demand recovery, Shou
said.
Newly launched refinery complexes - privately controlled
Jiangsu Shenghong Petrochemical and PetroChina's Guangdong
Petrochemical - have added to surging supplies of petrochemicals
from mega private refiner Zhejiang Petrochemical Corp and Hengli
Petrochemical that started just a few years ago.
Sinopec, which also produces chemicals from coal, a business
accounting for 10% of its chemicals sector, is advancing plans
to invest in coal mines in northern China's Inner Mongolia
region, Vice President Huang said, without elaborating.
(Reporting by Chen Aizhu; Editing by Muralikumar Anantharaman
and Sonali Paul)
