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    600028   CNE0000018G1

CHINA PETROLEUM & CHEMICAL CORPORATION

(600028)
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End-of-day quote. End-of-day quote Shanghai Stock Exchange - 01/19
4.34 CNY   0.00%
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China exports gasoline to Mexico, Nigeria amid overflowing output

07/25/2019 | 02:44pm EST

SINGAPORE (Reuters) - China will ramp up gasoline exports in July and August to near record levels with cargoes moving to Mexico and Nigeria as refiners seek outlets for their fuel amid a wave of new production and slowing domestic demand.

The surge in Chinese shipments will fill a supply gap caused by refinery outages in the United States and the Middle East but are likely to accelerate a plunge in Asian gasoline margins, which have dropped 50% since July 12, when they clawed back to a three-month high.

China's refineries, led by PetroChina Co, the country's second-largest, will export about 1.5 million tonnes of gasoline a month in July and August, said two senior traders with knowledge of China's gasoline exports. That is up from June exports of 1 million tonnes and near the record of 1.69 million tonnes exported in March, according to Chinese customs data.

The export surge is a result of the start up of two large-scale refineries owned by Hengli Petrochemical and Zhejiang Petrochemical that will each add about 4 million tonnes per year of new gasoline output when fully operational.

The surge will reverse the trend of falling gasoline exports in 2019, for the first half of 2019 they are down 9% from the same period a year ago.

"Gasoline was overflowing (in China) as Hengli shocked the market...companies took the advantage of stronger demand in Latin America and West Africa," said one of the traders.


(China's gasoline/diesel price gap narrows as petrol surplus grows:

PetroChina was granted gasoline export quotas of 4.7 million tonnes in the second batch of quotas issued in May, more than half of the quotas given. As a result, the company is placing cargoes to Mexico, Chile and Nigeria, according to the traders.

"Gasoline surplus in China is exacerbated by slowing demand growth, given weakening consumer confidence as the trade war continues, reflected also in slumping car sales," said Michal Meidan, director of the China energy programme at Oxford Institute of Energy Studies.

Chinese refiners have loaded 1.2 million tonnes of gasoline for export as of July 23, after a record 1.6 million tonnes in June, according to data from Refinitiv.

One PetroChina-run plant, West Pacific Petrochemical Corp, sold 900,000 barrels of gasoline to Mexico in July, in three different shipments.

DECLINING AUTO SALES

China's refiners have tried to lower the so-called diesel/gasoline production ratio to produce less diesel and more of the motor fuel, causing the excess of gasoline, said Wang Yanting and Shi Linlin, analysts at Shandong-based consultancy JLC.


(China has been cutting diesel output, raising gasoline:

The shift in production was aimed initially at easing the overhang of diesel as demand for the industrial and truck fuel has fallen amid a slowing economy.

Top refiner Sinopec, for example, squashed that ratio to a historic low to 1.01 in the first quarter this year, versus 1.33 in the same period in 2015, according to company reports.

As a result, China's gasoline output in the first half of 2019 rose 2.9% from a year earlier while diesel dropped 7.8%, according to the National Bureau of Statistics.

Gasoline demand growth is also sliding as Chinese automobile sales, consisting mainly of petrol-consuming passenger vehicles, fell for a 12th month in June, with 2019 annual sales set to fall for the second year in a row.

Seng-Yick Tee, senior director at consultancy SIA Energy, forecasts China's gasoline demand to rise 5.4% this year, the slowest pace since 2015, as the falling auto sales reduce consumption.


(China's auto sales in 12 months decline:

As a result of the petrol glut, plants that make mixed aromatics, petrochemicals used to raise the octane rating in gasoline, in eastern China's Shandong province have closed.

Shandong-based consultancy JLC estimates about 30 plants with annual output of 5 million tonnes have shut for months this year as demand for mixed aromatics has declined.

"Our plant was losing money in a big way...We wish we had shut down earlier," said a mixed aromatics plant manager in the city of Zibo, Shandong, which has closed its 8,000 barrels per day facility since March.

(Reporting by Chen Aizhu; additional reporting by Beijing Newsroom; editing by Christian Schmollinger)

By Chen Aizhu


ę Reuters 2019
Stocks mentioned in the article
ChangeLast1st jan.
CHINA PETROLEUM & CHEMICAL CORPORATION 0.00% 4.34 End-of-day quote.2.60%
DOW JONES AFRICA TITANS 50 INDEX 1.23% 559.6 Delayed Quote.3.11%
HENGLI PETROCHEMICAL CO.,LTD. 0.45% 24.43 End-of-day quote.6.36%
PETROCHINA COMPANY LIMITED 0.18% 5.5 End-of-day quote.12.02%
S&P AFRICA 40 INDEX 1.06% 183.1 Delayed Quote.4.15%
SEEK LIMITED 1.41% 30.29 Delayed Quote.-8.88%
THE EASTERN COMPANY 0.97% 26.8075 Delayed Quote.8.78%
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Financials
Sales 2021 2 685 B 423 B 423 B
Net income 2021 75 295 M 11 859 M 11 859 M
Net cash 2021 52 878 M 8 328 M 8 328 M
P/E ratio 2021 5,31x
Yield 2021 10,8%
Capitalization 500 B 78 770 M 78 805 M
EV / Sales 2021 0,17x
EV / Sales 2022 0,16x
Nbr of Employees 384 065
Free-Float -
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Technical analysis trends CHINA PETROLEUM & CHEMICAL CORPORATION
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TrendsNeutralNeutralNeutral
Income Statement Evolution
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Mean consensus BUY
Number of Analysts 19
Last Close Price 3,36 CNY
Average target price 4,28 CNY
Spread / Average Target 27,4%
EPS Revisions
Managers and Directors
Bao Cai Yu President & Executive Director
Dong Hua Shou Chief Financial Officer
Yong Sheng Ma Chairman
Shao Feng Zhang Chairman-Supervisory Board
Hong Bin Cai Independent Non-Executive Director
Sector and Competitors
1st jan.Capi. (M$)
CHINA PETROLEUM & CHEMICAL CORPORATION2.60%78 770
EXXON MOBIL CORPORATION19.43%309 389
CHEVRON CORPORATION10.25%249 404
RELIANCE INDUSTRIES LTD6.49%214 910
BP PLC19.74%105 470
CHINA PETROLEUM & CHEMICAL CORPORATION13.50%78 770