Sinopec Reports Slump in Full-Year Profit as Headwinds Mount

(Bloomberg) — Sinopec’s full-year profit tumbled 16% amid sluggish demand, with China’s oil consumption likely nearing a peak.

The country’s biggest refiner’s net income fell to 49 billion yuan ($6.8 billion) in 2024 from 58.3 billion yuan a year earlier, the company said in a filing on Sunday, citing international financial reporting standards. That compared with analysts’ estimate for profit of 56.4 billion yuan.

The slump reflects the company’s operational challenges, with nationwide oil usage falling last year as the government pushes refiners to produce less fuel and more petrochemicals, and the electric-vehicle boom weighs on consumption of diesel and gasoline. Road-fuels demand is expected to keep declining this year, according to the International Energy Agency.

The operating profit for Sinopec’s refining business dropped by 67% to 6.71 billion yuan.

Global oil prices averaged about 3% less in 2024 on-year, with Brent extending declines this quarter as US President Donald Trump pushes his trade war and encourages higher production. While the drop reduced some costs for Chinese refiners, the contraction of nation’s property sector, an importer driver of demand, has discouraged processors from raising operational rates. 

READ: China’s Fuel Production Cuts Could Undermine Global Oil Demand

Meanwhile, the chemicals business’ operating loss increased by 66% from a year earlier to 10 billion yuan.

China aims to maintain nationwide oil output at about 200 million tons a year, while boosting gas supplies to enhance energy security, according to a government plan. Still, the refining sector is expected to face prolonged overcapacity, leading to the phase-out of smaller, unprofitable processors and gas-filling stations.

Sinopec’s peer Cnooc will report earnings on March 27, followed by PetroChina on March 30.

–With assistance from Felix Tam and Tian Ying.

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