China’s Sinopec 2023 profit falls 13% as chemicals incur loss for second year

SINGAPORE (ICIS)–Chinese producer Sinopec posted a 12.9% decrease in full-year 2023 net profit as product prices fell across the board, dragged down by operating losses in chemicals.

• Chemicals segment incurs CNY6.0bn ($832m) loss in 2023
• Refining earnings surge 69% as crude prices fall
• 2024 C2 output growth to slow from 6.5% in 2023

Sinopec is a major chemical producer in China.

In million yuan (CNY)	2023	2022	Change
Revenue	3,212,215	3,318,168	-3.2%
Operating expenses	-3,125,387	-3,242,333	-3.6%
Operating profit	86,828	75,835	14.5%
Profits attributable to shareholders	58,310	66,933	-12.9%

Among its four business segments, only chemicals reported a loss in 2023. The segment incurred operating losses for the second consecutive year.

The 2023 figure, however, was much lower compared with 2022, aided in part by feedstock optimization and increased run rates of profitable plants.

Operating profit (loss) in CNY million	2023	2022	Change
Exploration & production	44,963	53,716	-16.3%
Refining	20,608	12,211	68.8%
Marketing & distribution	25,939	24,537	5.7%
Chemicals	(6,036)	(14,127)	N/A

The chemical market faced a tough oversupply condition last year, following a significant increase in China’s petrochemical capacity, with declining prices dampening production margins.

China’s domestic chemical product prices in 2023 declined by 7.0%, with chemical margin at a low level, the company said.

Its ethylene (C2) production in 2023 stood at 14.31 million tonnes, up by 6.5% from 2022.

Sinopec’s total chemical sales volume last year increased by 1.7% to 83 million tonnes, it said.

Meanwhile, operating profit from refining in 2023 surged 69% due to lower crude prices, with both refinery throughput and domestic sales of oil products hitting record highs.

In 2023, Sinopec processed 258 million tonnes of crude, up by 6.3% from 2022.

Domestic sales of refined oil products (including gasoline, diesel and kerosene) last year reached 188 million tonnes, up 15.8% from the previous year.

For 2024, the company expects the Chinese economy will maintain a sustainable trend of recovery, with domestic demand for natural gas, fuel and chemicals to continue growing.

It expects volatility in crude prices to persist.

“Due to changes in global supply and demand, geopolitics and inventory levels, international oil prices are expected to fluctuate at medium to high levels,” Sinopec noted.

“Our company will put more focus on value creation with priority given to profit generation, transition, upgrading, reform, innovation, and risk control,” it said.

Sinopec 2024 forecasts	2024E*	2023	change
Crude production (million barrels)	279.06	281.12	-0.7%
Natural gas outputs (billion cubic feet)	1,379.70	1,337.82	3.1%
Crude throughput (million tonnes)	260	257.52	1.0%
Refined oil products output (million tonnes)	159	156	1.9%
Domestic sales of oil products (million tonnes)	191	188.17	1.5%
Ethylene production (million tonnes)	14.35	14.31	0.3%
Capital expenditure (CNY billion)	173	176.8	-2.1%

*Sinopec estimates

Focus article by Fanny Zhang

($1 = CNY7.21)

Thumbnail image: At the container terminal of Nanjing Port in Jiangsu Province, China, on 19 March 2024.(Costfoto/NurPhoto/Shutterstock)