Sinopec cites weak demand for drop in first-half profits

China Petroleum & Chemical Corp. (Sinopec) posted a 41.6% drop in net profit for the first half due to weaker demand for refinery products in its home market. However, the company says demand is expected to recover in the second half as Beijing implements monetary policies to shore up the economy. Net profit of the largest refiner in China dropped to CNY23.7 billion (US$3.8 billion) for the six months to June, from CNY40.2 billion (US$6.3 billion) a year earlier, mainly because of higher procurement costs of crude oil, which outpaced the increase in refinery product prices.
In the second half, the company plans to process 112 million tons of crude oil and sell 80 million tons of oil products, on par with production in the first half. It also expects to produce 4.63 million tons of ethylene, compared with 4.81 million tons in the first half. Sinopec also plans to produce 163.75 million barrels of crude oil and 293.07 billion cubic feet of natural gas, which are similar to production in the first half.
Separately, Sinopec announced that it would invest CNY59 billion (US$9.3 billion) to build a refinery in Guangdong. Meanwhile, Sinopec Shanghai Petrochemical, which operates the second-largest refinery of Sinopec, slipped into a CNY1.29 billion (US$20.4 million) net loss before a non-recurring gain from a CNY1.39 billion (US$220 million) net profit previously. The non-recurring gain, at CNY103.68 million (US$16.4 million), came mainly from government grants; Sinopec blamed the poor results on weak demand, volatile international crude oil prices and loss-making oil refining and chemical industries. (August 27, 2012)