Sinopec refinery utilization drops, but chemical exports rise due to Iran war
China's Sinopec on Wednesday said its refinery and petrochemical utilization rates dropped in the first quarter as the U.S.-Israeli war on Iran disrupted feedstock supplies, but its chemical exports are set for strong growth this year.
Sinopec, the world's biggest refiner by capacity, cut refinery utilization rates between January and March by 7.6% on an annualized basis to average at around 83%, the company said at an earnings briefing.
Its ethylene utilization rate stood at 89% in the first quarter, 1.5% lower than a year earlier, a company executive said.
The war on Iran, which started on February 28, has led to weeks of near-full closure of the Hormuz Strait, through which about 20% of the world's oil and gas flows, disrupting crude oil and petrochemicals feedstock supplies to many Asian refiners.
However, the conflict also created an opportunity for the refining giant to boost exports of chemical products, which it expects to rise 26% to 3.65 MM tons in 2026.
To help cover a crude oil supply gap and restore refinery processing margins, Sinopec has in recent weeks sought policy support to tap into commercial oil reserves and has obtained a full-year government quota for refined fuel exports this year, the company added. It exported 4.32 MM tons of refined fuel in the first quarter, including 3.82 MM tons of jet fuel. Its Asian refining processing margins have soared due to the war.
To safeguard domestic fuel supply, China issued a ban on fuel exports in March and the restriction was extended into April. However, the restriction excluded exports to Hong Kong and Macau, as well as aviation fuel refueling for international flights and bunker sales for shippers on international voyages. Sinopec estimated China's ethylene consumption would rise 2.7% in 2026. Sinopec's first-quarter liquefied natural gas (LNG) import business incurred an 830 MM yuan ($121.46 MM) loss due to reduced supplies under term contracts and higher spot imports, a company official said.
Sinopec is a regular LNG buyer from Qatar under a long-term agreement, but the war has damaged Qatar's production facilities and brought its gas exports to a halt.
($1 = 6.8335 Chinese yuan)
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