China's Sinopec on Wednesday said its refinery and petrochemical utilisation rates dropped in the first quarter as the US-Israeli war on Iran disrupted feedstock supplies, but its chemical exports are set for strong growth this year.
Sinopec, the world's biggest refiner by capacity, cut refinery utilisation rates between January and March by 7.6 percentage points on an annualised basis to average at around 83 per cent, the company said at an earnings briefing.
Its ethylene utilisation rate stood at 89 per cent in the first quarter, 1.5 percentage points lower than a year earlier, a company executive said.
The war on Iran, which started on February 28, has led to weeks of near-full closure of the Hormuz Strait, through which about 20 per cent of the world's oil and gas flows, disrupting crude oil and petrochemicals feedstock supplies to many Asian refiners.
However, the conflict also created an opportunity for the refining giant to boost exports of chemical products, which it expects to rise 26 per cent to 3.65 million tonnes in 2026.
To help cover a crude oil supply gap and restore refinery processing margins, Sinopec has in recent weeks sought policy support to tap into commercial oil reserves and has obtained a full-year government quota for refined fuel exports this year, the company added.
It exported 4.32 million tonnes of refined fuel in the first quarter, including 3.82 million tonnes of jet fuel. Its Asian refining processing margins have soared due to the war.
To safeguard domestic fuel supply, China issued a ban on fuel exports in March and the restriction was extended into April.
However, the restriction excluded exports to Hong Kong and Macau, as well as aviation fuel refuelling for international flights and bunker sales for shippers on international voyages.
Sinopec estimated China's ethylene consumption would rise 2.7 per cent in 2026.
Sinopec's first-quarter liquefied natural gas (LNG) import business incurred an CNY830 million ($121.46 million) loss due to reduced supplies under term contracts and higher spot imports, a company official said.
Sinopec is a regular LNG buyer from Qatar under a long-term agreement, but the war has damaged Qatar's production facilities and brought its gas exports to a halt.
(Reporting by Aizhu Chen in Singapore; Writing by Joe Cash and Sam Li; Editing by Himani Sarkar and Thomas Derpinghaus)