• 4 minutes Energy Armageddon
  • 6 minutes "How to Calculate Your Individual ESG Score to ensure that your Digital ID 'benefits' and money are accessible"
  • 12 minutes "Europe’s Energy Crisis Has Ended Its Era Of Abundance" by Irina Slav
  • 18 mins GREEN NEW DEAL = BLIZZARD OF LIES
  • 2 days Is Europe heading for winter of discontent with extensive gas shortages?
  • 19 hours Wind droughts
  • 4 days "Natural Gas Price Fundamental Daily Forecast – Grinding Toward Summer Highs Despite Huge Short Interest" by James Hyerczyk & REUTERS on NatGas
  • 2 days Kazakhstan Is Defying Russia and Has the Support of China. China is Using Russia's Weakness to Expand Its Own Influence.
  • 2 days Oil Prices Fall After Fed Raises Rates
  • 12 days How Far Have We Really Gotten With Alternative Energy
  • 4 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 10 days "Russian oil executive and Putin critic Ravil Maganov dead after mysterious six-story fall" - The New York Post
  • 2 days 87,000 new IRS agents, higher taxes, and a massive green energy slush fund... "Here Are The Winners And Losers In The 'Inflation Reduction Act'"-ZeroHedge
  • 7 days Beware the Left's 'Degrowth' Movement (i.e. why Covid-19 is Good)
  • 10 days The Federal Reserve and Money...Aspects which are not widely known

Overcapacity Pushes Chinese Refiners’ Profits Down 42% In 2019

New refining capacity depressed margins for Chinese refiners, with profits down 42 percent on the year in 2019, Reuters reports, citing the China Petroleum and Chemical Industry Federation.

Capacity increased by almost 900,000 bpd last year but combined with weak demand and record-high run rates, this trend has pushed profits lower. This overhang in capacity will continue to pressure refiners’ margins, the industry group said.

“For the full year and longer term, overcapacity will still be the dominant issue in the industry,” the vice chairman of the CPCIF said.

Total refining capacity on the world’s largest oil importer stood at 17.2 million bpd as of the end of 2019.

The coronavirus outbreak will not help matters, either. Demand for fuels has taken a severe beating since the start of the year, with refinery run rates falling to the lowest in six year last month, at around 10 million bpd, from close to 13 million bpd last year.

Chinese refiners, at least the private ones, are also facing a credit crunch because of the epidemic. According to unnamed Reuters sources, at least three private refiners, or teapots, have had credit lines to the tune of $600 million suspended by banks including French Natixis, Dutch ING, and Singapore DBS Group Holdings.

Even in this environment, the industry will continue building refineries this year as well, raising the already excessive total by another 3.1 percent, or 27 million tons.

“We have growing concerns over the overcapacity issue,” CPCIF’s vice chairman, Fu Xiangsheng, said. “With the launch of the integrated refining projects, production and sales rose but profits fell.”

The immediate outlook is not too good, again because of the coronavirus epidemic. While there are reports that business activity in China is beginning to recover after the worst of the wave of infections subsides, it is anyone’s guess how long this recovery will take, particularly with regard to fuel, hence oil, demand.

By Irina Slav for Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage



Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News