China Petroleum & Chemical Corp (CPCC, 中國石油化學), which increased refining every year for at least a decade, might keep its oil-processing target unchanged for next year because of waning demand and increasing competition.
CPCC, or Sinopec, as Asia’s biggest refiner is known, informed its refineries that the company is not to raise its target and asked them to make their annual plans accordingly, according to people with knowledge of the matter, who asked not to be identified because the information is not public. The company said in March it would refine 220 million tonnes this year, or 3 percent more than last year.
Sinopec has raised its refining volume each year since 2005, when Bloomberg began to compile the data. Slowing growth in the world’s second-biggest oil user has crimped demand for oil products, and led to swollen inventories and record diesel exports. In addition, smaller private refiners are taking market share from state-owned giants.
The annual target serves as a planning guide and regional factories still have the freedom to change refining plans based on their specific market conditions on a quarterly basis with the company’s approval, according to two of the people.
The plan might not get announced until January, when Sinopec’s state-owned parent holds its annual work conference in Beijing, according to the people. A Beijing-based spokesperson at Sinopec said the company has no comment on the matter.
Sinopec shares dropped 0.4 percent in Hong Kong to close at HK$5.53, compared with a 1.2 percent decline in the city’s benchmark Hang Seng Index.
“On one hand, we have very weak diesel demand amid a slowing economy, and on the other, teapots are snatching market share after operating rates soared with new access to import quotas,” said Gao Jian (高健), an analyst at SCI International, a Shandong-based energy consultant. “Sinopec seems to have no other choice but to reduce oil processing, there’s simply no market to sell extra fuel.”
China more than doubled the crude imports quota for non-state companies next year after granting 11 independent refiners, known as teapots, direct quotas to import crude oil. Operating rates at teapots rose to 45 percent as of Oct. 30, the highest since 2012, according to industry Web site Oilchem.net.
The world’s second-largest economy grew 7 percent in each of the first two quarters of this year, in line with the government’s goal for the year, before slowing to 6.9 percent in the third quarter. To keep growth on track, the People’s Bank of China cut benchmark interest rates six times in the past year, to a record low of 4.35 percent.
China needs an average GDP growth of about 6.5 percent in the next five years to meet its goal of achieving a “moderately prosperous” society by 2020, Premier Li Keqiang (李克強) said last week.
The nation’s apparent oil demand fell by 1.79 percent in September, the least since July last year, according to data compiled by Bloomberg. Diesel exports jumped to a record 1 million tonnes in September as refiners sought to lower stockpiles amid slowing industrial expansion, according to data from the General Administration of Customs. The nation’s crude inventories increased to 34.31 million tonnes last month, the highest in eight months, according to data from Xinhua News Agency’s China Oil, Gas and Petrochemicals newsletter.
Sinopec’s total refining volume rose 1.4 percent to 161.7 million tonnes in the first nine months of the year, according to its third-quarter earnings statement.
CHIP WAR: Tariffs on Taiwanese chips would prompt companies to move their factories, but not necessarily to the US, unleashing a ‘global cross-sector tariff war’ US President Donald Trump would “shoot himself in the foot” if he follows through on his recent pledge to impose higher tariffs on Taiwanese and other foreign semiconductors entering the US, analysts said. Trump’s plans to raise tariffs on chips manufactured in Taiwan to as high as 100 percent would backfire, macroeconomist Henry Wu (吳嘉隆) said. He would “shoot himself in the foot,” Wu said on Saturday, as such economic measures would lead Taiwanese chip suppliers to pass on additional costs to their US clients and consumers, and ultimately cause another wave of inflation. Trump has claimed that Taiwan took up to
A start-up in Mexico is trying to help get a handle on one coastal city’s plastic waste problem by converting it into gasoline, diesel and other fuels. With less than 10 percent of the world’s plastics being recycled, Petgas’ idea is that rather than letting discarded plastic become waste, it can become productive again as fuel. Petgas developed a machine in the port city of Boca del Rio that uses pyrolysis, a thermodynamic process that heats plastics in the absence of oxygen, breaking it down to produce gasoline, diesel, kerosene, paraffin and coke. Petgas chief technology officer Carlos Parraguirre Diaz said that in
SUPPORT: The government said it would help firms deal with supply disruptions, after Trump signed orders imposing tariffs of 25 percent on imports from Canada and Mexico The government pledged to help companies with operations in Mexico, such as iPhone assembler Hon Hai Precision Industry Co (鴻海精密), also known as Foxconn Technology Group (富士康科技集團), shift production lines and investment if needed to deal with higher US tariffs. The Ministry of Economic Affairs yesterday announced measures to help local firms cope with the US tariff increases on Canada, Mexico, China and other potential areas. The ministry said that it would establish an investment and trade service center in the US to help Taiwanese firms assess the investment environment in different US states, plan supply chain relocation strategies and
Japan intends to closely monitor the impact on its currency of US President Donald Trump’s new tariffs and is worried about the international fallout from the trade imposts, Japanese Minister of Finance Katsunobu Kato said. “We need to carefully see how the exchange rate and other factors will be affected and what form US monetary policy will take in the future,” Kato said yesterday in an interview with Fuji Television. Japan is very concerned about how the tariffs might impact the global economy, he added. Kato spoke as nations and firms brace for potential repercussions after Trump unleashed the first salvo of
RSS