China Petroleum & Chemical Corporation’s performance forecast shows that the company’s net profit attributable to shareholders for the first half of this year is expected to be between 201 billion and 216 billion yuan, the worst in nearly 5 years with a decrease of around 40% compared to the same period last year. Analysts attribute this decline to decreasing profits from chemical products, sluggish demand for refined oil products, and challenges in overseas operations.
Not only China Petroleum & Chemical Corporation, but also more than half of the chemical industry in China suffered losses in various product categories in the first half of the year. Industry insiders bluntly stated: the profit from selling one ton of chemical product is not even comparable to selling one ton of mineral water.
On the evening of July 31, Sinopec released a performance forecast for the first half of 2025, estimating the net profit attributable to the parent company’s shareholders to be between 201 billion and 216 billion yuan, a decrease of 39.5% to 43.7% compared to the same period last year. In the same period of the previous year, Sinopec’s net profit attributable to shareholders was 357.03 billion yuan.
According to an article by “Huaxia Energy Network,” this marks the worst performance for Sinopec since the same period in 2021. In the periods from 2021 to 2024, the company’s net profit attributable to shareholders exceeded 35 billion yuan.
Upon opening on August 1, Sinopec’s stock price plummeted sharply, dropping over 5% during trading and closing with a 5.32% decrease, marking the largest single-day decline of the year. On the same day, PetroChina also experienced a significant drop, down 4.06%.
The downward trend of Sinopec’s performance was already foreshadowed. In the first quarter of this year, Sinopec’s net profit was 13.264 billion yuan, a year-on-year decrease of 27.6%, with revenue falling by 6.9% to 735.3 billion yuan.
The situation worsened in the second quarter. Based on the upper limit of the net profit for the first half of the year at 216 billion yuan, the net profit for the second quarter was projected to be only 8.336 billion yuan at most, marking a further decline of 37%.
Sinopec explained that the significant drop in international crude oil prices, intense competition in the petroleum and petrochemical markets, and low profits in the chemical market have all affected the company’s operating performance.
Renowned financial media figure “Guangtou Zhengzhong” believes that the decline in international crude oil prices is not the main cause. He further analyzed that the delayed profitability in the chemical industry is a significant factor. Prices of basic chemicals such as ethylene have been weak, dragging down the sector’s profitability, with the chemical business even posting a loss of 1.4 billion yuan in the first quarter.
An article from the Sinopec administration’s “China Petroleum and Petrochemicals” previously reported that based on 157 monitored chemical products in China, in the first half of the year, approximately 46% of the products were profitable, with less than one-third having a profit margin above 5% and 44% having profit margins within ±5%.
According to the statistics from the Chinese National Bureau of Statistics on industrial enterprises above designated size, in the period from January to June this year, the chemical raw materials and chemical product manufacturing industry achieved revenue of 3.69574 trillion yuan, a year-on-year increase of 2.1%, with a profit of 151.58 billion yuan, a decrease of 4.7%. The chemical fiber manufacturing industry achieved operating income of 4.39 trillion yuan, a decrease of 7.1%, with a total profit of 8.49 billion yuan, a decrease of 12.9%.
Blogger “He Manman Discusses Finance” quoted industry experts as saying: “Currently, selling one ton of chemical product is less profitable than selling one ton of mineral water.”
Taking the example of 2024, according to data from Wind on July 23 this year, among the 2,173 listed companies on the Hong Kong Stock Exchange that disclosed relevant data, Nongfu Spring’s 58.1% gross profit margin ranked 281st, surpassing more than 80% of listed companies in Hong Kong; China Resources Beverage ranked 458th, with a gross profit margin higher than 70% of listed companies in Hong Kong.
Wind data shows that in 2024, among the 5,318 A-share listed companies that disclosed relevant data, over 90% of companies had lower gross profit margins than Nongfu Spring, and over 80% had lower margins than China Resources Beverage.
Secondly, there is a cliff-like drop in diesel demand. With the popularity of electric vehicles and a downturn in logistics, diesel sales plummeted by 17.2%, leading to a 5.3% contraction in refined oil processing.
According to Sinopec’s previously disclosed performance hints for production and operation, in the first half of 2025, domestic sales of refined oil by Sinopec totalled only 87.05 million tons, down by 3.4% compared to the first half of the year; gasoline and diesel production were 30.79 million tons and 24.27 million tons, down by 4.8% and 17.2%, respectively. Crude oil production was 140.04 million barrels, down by 0.3% year-on-year.
Thirdly, overseas operations faced setbacks. Overseas crude oil production plummeted by 5.2%, with geopolitical risks hindering the company’s “go global” strategy.
In a report by “China Petroleum News” at the end of 2024, the cumulative replacement of gasoline and diesel consumption by new energy vehicles and natural gas heavy trucks exceeded 50 million tons, an increase of 20 million tons from the same period in 2023, with the replacement rate reaching about 15%… By 2030 and 2035, gasoline and diesel consumption is expected to decrease by about 25% and 50%, respectively, from the levels in 2023, with aviation kerosene becoming the only growth area during this period.
In the short term regarding diesel, industry sectors related to goods transportation, real estate, and traditional infrastructure are experiencing sluggish growth; in the medium term, the LNG heavy truck market is in a stage of rapid expansion; and in the long term, the slowdown in the secondary industry is reducing the intensity of diesel consumption.
Reuters analysis suggests that even as the Chinese economy begins to recover momentum under ongoing stimulus measures and avoids any damage from tariffs expected by the Trump administration, the situation may remain challenging.