China's Sinopec posted an 8.9% decline in its first-quarter profit, as rising raw materials costs and more competition hurt its petrochemical business, offsetting higher fuel sales and oil prices.
China Petroleum & Chemical Corp (600028.SS), as Sinopec is officially known, reported on Sunday a net income of 18.32 billion yuan ($2.53 billion) between January and March, according to a filing with the Shanghai stock exchange based on Chinese accounting standards.
The refining giant said crude oil prices have fluctuated upwards, and domestic demand for natural gas, refined oil products and petrochemical products grew compared to a year ago, but profits from petrochemicals were still muted as more production capacity came online and raw materials are costlier.
The world's largest oil refiner by capacity, Sinopec's first-quarter crude oil throughput rose 1.7% over a year earlier to 63.3 million tons, or 5.08 million barrels per day.
Its refined fuel sales expanded 6.5% to 59.81 million metric tons.
Sinopec said production of ethylene, a key building block for petrochemicals, declined 2% during the period, extending a 7.2% year-on-year fall during the same period of 2023 as competition picked up.
Crude oil production rose 1.3% on the year to 70.36 million barrels, while that of natural gas expanded by 6% to 350.46 billion cubic feet.
Capital expenditure was 20.5 billion yuan, down from 23.4 billion yuan a year earlier.
The company allocated 13.5 billion yuan in capital expenditure for its exploration and development segment, mainly to build crude oil production capacity in Jiyang and Tahe, natural gas production in western Sichuan, as well as LNG storage and transportation facilities in Longkou.
It will allocate 4.1 billion yuan for refining projects.
Sinopec CEO Dong Zhao told the CERAWeek energy conference last month that rising electric car sales will reduce refined product demand in China by 20 million tons per year, without giving a timeline.
As a result, Sinopec is eyeing new markets abroad, with plans to build its first fully-controlled overseas refinery in Sri Lanka, senior industry sources say.
(ton = 7.3 barrels for crude oil conversion)
($1 = 7.2464 Chinese yuan renminbi)
