Chinese state-controlled Sinopec cut crude runs and product sales in the third quarter as downstream margins weakened, leading to lower profits for the quarter.
Sinopec processed 5.08mn b/d (190.69mn t) of crude in the first nine months of this year. The firm set a full-year target of 260mn t (5.2mn b/d) earlier in March. It sold 3.94mn b/d (138.06mn t) of gasoline, diesel and jet in the first nine months of this year domestically and has set a 2024 target of 191mn t. This suggests it will need to further ramp up throughput and sales in the fourth quarter to meet full-year targets. Sinopec is expected to pare back refinery runs this month from last month as margins weaken.
But the company's gas output grew faster than expected. Output rose by 5.6pc on the year to 3.83bn ft³/d. It set a 2024 target of 3.78bn ft³/d earlier this year, which would be a 3pc growth from a year earlier.
The company has this year "adjusted utilisation rate and product mix," it said, to counter "severe challenges" from rapidly decreasing oil prices and narrowing margins for certain products during the first nine months of this year.
But this still failed to stem losses in its downstream segments in the July-September quarter, including refining and chemicals. Chinese gasoline crack spreads have collapsed to -$1.22/bl on 25 October, from their summer peak of $18.68/bl on 5 August, because of weak demand exacerbated by rapid displacement in the transport sector by electric vehicles, and this is forcing refiners to cut runs and boost exports.
The company's net profit fell by 55pc on the year to 8.03bn yuan ($1.12bn) in July-September, a slightly bigger drop than some analysts estimated. Refining earnings before interest and taxes (ebit) of -$0.29/bl in the quarter is the lowest level since the fourth quarter of 2022, when it fell to -$2.61/bl. The fall in July-September ebit may be partly because of crude inventory loss, although the company did not specify.
The company stepped up its "oil to chemicals" and "oil to specialties" project expansions. Its combined capital expenditure (capex) of Yn28bn for its refining and chemicals segments in January-September went to expanding the refining capacity at its 540,000 b/d Zhenhai refinery in eastern Zhejiang and adding of ethylene capacity at refineries including its 470,000 b/d Maoming refinery in southern Guangdong.
| Sinopec 3Q 2024 results | |||
| 3Q24 | 3Q23 | ±% | |
| Profit Yn bn | |||
| Profit | 8.0 | 17.9 | -55.2 |
| Upstream | 16.1 | 16.2 | -1.0 |
| Refining | -1.0 | 7.3 | -113.3 |
| Marketing | 5.2 | 9.6 | -45.4 |
| Chemicals | -1.6 | -3.3 | -51.5 |
| Natural gas and pipeline | NA | NA | NA |
| Sales mn b/d | |||
| Domestic product sales | 4.1 | 4.3 | -4.4 |
| Total product sales | 5.3 | 5.4 | -2.0 |
| Output | |||
| Crude output mn b/d | 0.8 | 0.8 | -0.2 |
| Natural gas output bcf/d | 3.8 | 3.6 | 4.7 |
| Refinery runs mn b/d | 5.1 | 5.3 | -4.8 |
| Gasoline output mn b/d | 1.5 | 1.6 | -0.5 |
| Diesel output mn b/d | 1.1 | 1.3 | -14.2 |
| Jet output mn b/d | 0.7 | 0.7 | 2.8 |
| Source: Sinopec, Argus | |||
