Earnings at China's State Majors Signal Tepid Demand for Oil Imports

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China News

Oil And Gas,Refining,Crude Oil

China's major oil and gas companies reported record-high profits, but weak refining margins due to declining fuel demand, particularly diesel, offset the gains.

China’s biggest state-owned oil and gas corporations reported this week record-high profits, but the outperforming upstream divisions at all majors masked their weak refining businesses which reflected tepid Chinese fuel demand. China’s crude oil imports fell by 2.4% between January and July compared to the same period of 2023. Oil imports in July were down by 12% from June and by % from July 2023, raising concerns about the country's economic health and future oil demand.

, showed outstanding exploration and production profits and weaker refining. Sinopec, or China Petroleum and Chemical Corporation as it is officially known, was hit the hardest due to the larger share of refining of its assets. Sinopec reported this weekend a first-half net profit that rose 1.7% year-over-year to $5 billion 35.7 billion Chinese yuan. The higher earnings were due to increased domestic crude oil and natural gas production and rising international oil prices.

and PetroChina reported this week record-high net income and operating income, respectively, for the first half of 2024, as they boosted domestic oil and gas production. The higher output in China, combined with weaker-than-expected fuel demand in the country, doesn’t bode well for Chinese crude oil imports in the near term. Moreover, China’s weak diesel demand is not only the result of the property crisis and lackluster economy.

 

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