Sinopec adjusting 2020 targets on COVID-19 outbreak, reports lower 2019 sales, profits
2020-03-31    [Source:Chemical week]

    Sinopec on Sunday reported its 2019 results and said it planned to reduce capital expenditure (capex) this year by 2.5% following the big drop in oil prices and lackluster demand for fuel caused by the outbreak of coronavirus disease 2019 (COVID-19). The company also says that it is in the process of adjusting its production targets for 2020 following the outbreak and will confirm its plan in accordance with market developments.

    Sinopec plans to invest 143.4 billion renminbi ($20.2 billion) this year, with 61.1 billion renminbi on upstream exploration. The cuts will come from Sinopec’s refining units, which will reduce spending by 9 billion renminbi from 2019 to 22.4 billion renminbi, and from the sales division, down by 7.6 billion renminbi. In the chemicals sector, capex will rise by 9.9 billion renminbi to 32.3 billion renminbi, which will be used in the Zhongke, Zhenhai, and Gulei construction projects; the Sinopec-SK and Sinopec-Sabic ethylene-revamping projects; the Sinopec-Sabic polycarbonate project; the Jiujiang aromatics project; and the Zhong An coal-to-chemical project.

    Announcing the results, Zhang Yuzhuo, Sinopec chairman, said the global economy would face more instability and uncertainty brought by the outbreak, but “although the virus may temporarily impact the Chinese economy, we firmly believe that China’s solid economic fundamentals will remain unchanged and the country’s potential and momentum will remain strong…We believe that as the control and prevention of the outbreak continue to improve domestically, the domestic demand for petroleum and petrochemical products that was suppressed and frozen will rebound quickly.”

    Operating revenue of Sinopec's chemicals segment was 495.2 billion renminbi in 2019, representing a drop of 9.4% compared with 2018. This was mainly due to a sharp decrease in prices of chemical products on the back of capacity additions and to the resulting change in the supply/demand structure. Operating profit of the segment was down 36.5% to 17.2 billion renminbi.

    Sinopec’s ethylene production reached 12.49 million metric tons (MMt) last year, up 8.5%. Output of synthetic resins was 8.3% higher at 17.24 MMt, and synthetic rubber production rose 16.9% to 1.05 MMt. Synthetic fiber—monomer as well as polymer—recorded an output increase of 7.3% to 10.03 MMt. Total chemical sales volume increased by 3.3% to 89.50 MMt.

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