China Petroleum & Chemical Corporation (Sinopec) has registered turnover and other operating     revenues in the first half of 2023 at RMB1.59 trillion. Profit attributable to equity shareholders of the Company was RMB36.122 billion. The company seized market opportunities, carried out in-depth optimization of the entire industrial chain, enhanced production and marketing coordination, flexibly adjusted raw materials, product slate and utilisation rate, strengthened cost control, and achieved solid operating results.

In the first half of 2023, China’ economy continued to recover and showed a good momentum, recording a GDP growth of 5.5% year-on-year. Domestic natural gas demand picked up with apparent consumption up by 6.7% year-on-year.

Domestic demand for refined oil products rebounded with apparent consumption up by 16.2% year-on-year, among which, gasoline, diesel and kerosene consumption increased by 9.8%, 15.1% and 78.1% respectively. Domestic demand for chemicals was weak with ethylene equivalent consumption up by 2.4% year-on-year.

On refining, in the first half of 2023, Sinopec actively addressed the challenges brought by the decline of crude oil prices and narrowed profit margin of certain refined oil products, adhered to the integration and optimization of production and marketing, increased utilization rate and maximized the efficiency of the business chain. We dynamically enhanced resources allocation and lowered procurement cost. We closely followed market demand, effectively optimised the rhythm of converting refined oil products to chemical feedstock and refining specialties, and increased production of marketable products such as high grade lubricating oil and grease. We scaled up export volume and optimized export scheduling and structure. We accelerated construction of world-class bases and promoted structural adjustment projects in an orderly manner. In the first half of 2023, Sinopec processed 126.54 million tonnes of crude oil, up by 4.8% year-on-year and produced 76.07 million tonnes of refined oil products, up by 10.3% with kerosene output up by 63.5% year-on-year.

In the first half of 2023, chemical industry situated cyclical trough, new capacities rapidly released combined with weak demand. Facing severe market situations, the Company coordinated long-term development and efforts in reducing loss and increasing profit, and strengthened cost control to maximize the overall value of the business chain. We enhanced analysis of product marginal profit, increased output of profitable products, and reduced utilisation rate of marginal loss units or even shut them down for operational consideration. Integration of production, marketing, research and application was further cemented to increase portion of high value-added products. We pushed forward the scale capacity building of Zhenhai and Tianjin Nangang. In the first half of the year, ethylene production was 6.875 million tonnes. The Company expanded domestic and overseas markets, increased market sales volume and profit, the total chemical sales volume in the first half reached 41.63 million tonnes, up by 3.1% year-on-year.

In the first half of 2023, the operating revenues of this segment were RMB244.3 billion, decreased by 12.2% year-on-year. This was mainly due to weak demand for chemical products and decrease by 13.4% in terms of averaged products prices year-on-year. In the first half of 2023, the segment enhanced cost control and optimized slate of products. However, due to weak demand and concentrated release of production capacities, the margin of chemical products decreased by 57% year-on-year, with an operating loss of RMB3.4 billion and a year-on-year decrease of RMB4.2 billion.

 Outlook

In chemicals, Sinopec will adhere to the strategy of “basic + high-end”, closely follow marginal profit to enhance structure adjustment, strengthen optimisation of feedstock and reduce costs. Based on market need, we will dynamically monitor the changes in marginal contribution of the products, and keep high utilization of the profitable units. We will integrate production, marketing, research and application, strengthen the research and development of new materials and high value-added products, and increase profits. We will promote the layout of large-scale ethylene projects and the transformation and upgrading of aromatics. We will also push ahead with domestic and overseas market expansion, and strengthen strategic customers cooperation and tailor-made product service. In the second half of the year, we plan to produce 7.15 million tonnes of ethylene.