China's Sinopec Shanghai Petrochemical posted a 19.3% year-on-year rise in first-half net profit, even as the Strait of Hormuz remained largely closed since March. Refining margin increased despite lower crude throughput, and the company recorded a 16 billion yuan provision for asset impairment tied to oil and fuel price volatility.
Sinopec Shanghai Petrochemical Co Ltd Class A reported net profit of 25.63 billion yuan ($3.81 billion) for the January-June period, up from 21.48 billion yuan a year earlier, according to a filing to the Shanghai stock exchange on Sunday. The company also recorded a 16 billion yuan provision for asset impairment tied to oil and fuel price volatility during the six-month period, a separate filing showed.
The refiner processed 113.31 million metric tons of crude oil between January and June, equal to 4.57 million barrels per day, a 5.6% decline from the year-ago period. Despite the lower throughput, its refining margin rose 44.1% year-on-year, climbing 139 yuan per metric ton to 453 yuan per metric ton. As a result, operating profit in the refining segment grew 381.5%, the filing said, as the company expanded crude oil sourcing outside the Middle East, adjusted purchase timing to market conditions, and shifted its product mix toward more profitable output.
The company sources half of its crude oil needs from the Middle East, and the Strait of Hormuz, a key route for its oil imports, has remained largely closed since March. Domestic fuel demand has fallen during the period, while Beijing has limited the company's ability to pass higher oil costs on to consumers through fuel price increases.
Source: Investing.com
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