China Petroleum & Chemical Corp., known as Sinopec, processed 126.69 million metric tons of crude oil or 5.08 million barrels per day (bpd) in the first half of the current year, showing a slight 0.1% year-on-year increase.

Source: OilPrice

This growth was considerably lower than the 1.7% increase seen in the first quarter, indicating a noticeable slowdown in processing in the second quarter due to higher crude prices and sluggish domestic fuel demand.

Sinopec reported that total domestic refined fuel sales decreased by 2.5% year on year to 90.14 million tons, with retail sales plummeting by 4.7% year on year to 56.96 million tons.

These latest figures continue a trend of weak performance for the company. Earlier in the year, Sinopec disclosed a 13% drop in its 2024 profits, attributed to reduced oil and gas prices. The company's net income for FY 2024 stood at 58.3 billion yuan ($8 billion), down from 66.2 billion yuan recorded in 2022, as oil prices declined by 17%. The decrease in oil prices affected both the value of Sinopec's drilling output and its crude costs.

Sinopec's refining margins have shrunk, upstream profits have contracted, and its chemicals business continues to operate at a loss. Many Chinese refiners, including Sinopec, increased fuel production last year in anticipation of a post-COVID-19 business surge.

Sinopec plans to cap its 2024 capital expenditure budget at 173 billion yuan, slightly lower than the previous year's 176.8 billion yuan, primarily due to a reduction in its chemicals segment. The company aims for modest growth in output and processing this year, with a projected 1% increase in oil production compared to 2023 levels, while refining throughput is expected to rise by only 0.8%.

Additionally, Sinopec anticipates a 1.6% increase in domestic refined oil product sales this year, a decrease from the 16% surge seen in 2023.

China's economy is showing resilience, with the International Monetary Fund revising its 2024 economic growth forecast for China to 5% from the previous 4.6% prediction in April. The country's GDP grew by 5% year on year in the first half of the year, slightly easing to 4.7% in the second quarter. In 2023, China's real GDP expanded by 5.2%, reaching RMB 126.06 trillion (US$17.5 trillion).