Sinopec expects China's oil demand to recover in Q2, positive growth in 2022

CHINA'S Sinopec expects demand for refined oil products to recover in the second quarter as Covid-19 outbreaks in the country are gradually controlled, and sees full year oil consumption reaching positive growth.

Asia’s biggest oil refiner has cut its refining runs since the second half of March and is maintaining an “optimal” refinery operation ratio of around 85 per cent, compared with 92.6 per cent earlier in the year, Sinopec officials said at a briefing on Thursday (Apr 28).

Cities across China, including the financial hub of Shanghai, were put under lockdowns following a flare up of Covid-19 cases, leading to road freight clogs and port congestion.

“The anti-Covid measures have restrained consumption of refined oil products. But we expect oil demand to gradually resume in the second quarter with the pandemic outbreak under control,” said Li Li, deputy head of Sinopec’s operation management department.

“At this moment, we are confident about the 2022 fuel consumption in China...Even if the recovery in the second quarter is moderate, the full year growth will remain positive.”

Sinopec also expects its total liquefied natural gas (LNG) imports to stay steady in 2022.

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The firm incurred a loss of 1.6 billion yuan (S$336.7 million) from its 4.8 million tonnes of LNG imports in the first quarter, 1.2 billion yuan more than a year earlier due to high import costs.

Sinopec officials said the firm is reducing purchase of spot LNG cargos and will focus more on term-contracts in the coming months. REUTERS