**Sinopec Reports 16% Drop in Full-Year Profit Amid Sluggish Demand**
Sinopec, China’s largest oil refiner, experienced a 16% decline in its full-year profit for 2024, attributed to sluggish demand and a peak in oil consumption in China. The company’s net income fell to 49 billion yuan ($6.8 billion) from 58.3 billion yuan the previous year, as reported in a recent filing. This figure was below analysts’ expectations of 56.4 billion yuan. The decline highlights operational challenges faced by Sinopec, with national oil usage decreasing as the government encourages refiners to shift focus from fuel production to petrochemicals. Additionally, the rise of electric vehicles is impacting diesel and gasoline consumption.
### Declining Road Fuel Demand
– The International Energy Agency predicts that road fuel demand will continue to decline this year.
– Sinopec’s refining business saw a staggering 67% drop in operating profit, which fell to 6.71 billion yuan.
– Global oil prices averaged about 3% lower in 2024 compared to the previous year, with Brent crude prices declining further due to trade tensions and increased production.
### Challenges in the Chemicals Sector
– The operating loss in Sinopec’s chemicals division surged by 66% year-on-year, reaching 10 billion yuan.
– The Chinese government aims to maintain oil output at approximately 200 million tons annually while enhancing gas supplies for energy security.
– The refining sector is expected to face ongoing overcapacity, leading to the potential phase-out of smaller, unprofitable processors and gas stations.
As Sinopec’s peers, Cnooc and PetroChina, prepare to report their earnings later this month, the industry remains vigilant about the implications of these trends on future profitability.
**FAQ: What factors contributed to Sinopec’s profit decline in 2024?**
Sinopec’s profit decline was primarily due to sluggish demand for oil, a shift in government policy encouraging less fuel production, and the impact of the electric vehicle boom on traditional fuel consumption.
