Sinopec expects fuel demand to recover from Covid-19 drop-off in second quarter, as it reports 27 per cent profit growth
- The petroleum and chemical giant is maintaining relatively high inventory to prepare for demand recovery, after refinery utilisation dipped in recent weeks
- Price increases of 62 per cent and 15 per cent for oil and natural gas, respectively, drove profit growth in the first three months of the year, the company said
China Petroleum & Chemical (Sinopec) expects fuel demand in the world’s second largest economy to gradually recover later this quarter, after its refinery utilisation rates and cash flows were hit by city lockdowns and logistics hiccups.
The company, the world’s largest oil refiner and fuel producer, saw the average usage of its refining plants decline to around 85 per cent in recent weeks from 92.6 per cent in the first two months of the year, Huang Wensheng, secretary to the board of directors, told analysts and reporters on Thursday.
“The company is maintaining a relatively high inventory level to prepare for the post-pandemic demand recovery,” he said.
Late on Wednesday Sinopec posted a 27 per cent year-on-year growth in net profit to 22.45 billion yuan (US$3.41 billion) for the year’s first three months, thanks to 62 per cent and 15 per cent jumps in the selling prices of oil and natural gas, respectively.
The company forecasts solid demand for the whole year despite the recent drop, based on its experience with the severe acute respiratory syndrome (Sars) epidemic in 2003 and the first wave of the Covid-19 pandemic in 2020. In February 2020, for example, its refinery utilisation plunged to 66 per cent from 91 per cent a month earlier.
“From these episodes, we learned that fuel consumption did rebound once the disease’s spread is under control, and often strongly,” said Li Li, deputy head of the company’s operation management department.
