popular articles

Sinochem closes third refinery in China due to low margins

The closure of Sinochem's third refinery in Shandong underscores the economic difficulties associated with rising crude costs and weak demand for refined fuel.

Please share:

A Chinese court has declared the bankruptcy of Shandong Changyi Petrochemical, one of the refineries owned by the Sinochem group.
This decision comes after months of uncertainty surrounding the future of several refineries located in Shandong province, China’s main refining center.
Two other refineries belonging to the group, Shandong Huaxing Petrochemical Group and Zhenghe Group Co Ltd, have also been declared bankrupt in recent days.
The combined capacity of the three sites is 380,000 barrels per day, representing around 3% of national refinery output.
However, weak demand and steadily rising crude oil prices have made operations at these sites unprofitable, prompting Sinochem to temporarily shut down some of these units before their final closure.
The Group has not yet specified the fate of the assets of the three refineries.

A petrochemical sector in difficulty

China’s refining market is bearing the full brunt of rising crude costs.
Refinery margins have been severely squeezed, particularly in Shandong province, where independent refineries operated at just 56.4% of capacity in August 2024.
This 10-point year-on-year drop reflects the economic challenges facing the sector.
Falling demand for fuel, coupled with rising costs, is putting pressure on local players, forcing them to adjust production.
These closures are part of a wider drive to rationalize refining capacity in China.
For several months, the authorities have been seeking to concentrate production around the largest units, which are more efficient and better integrated into global supply chains.
Small independent refineries, often located in Shandong, are the first victims of this restructuring, especially as they are largely dependent on crude oil imports for their operations.

Impact on the supply of petroleum products

The closure of these refineries directly affects the supply of refined petroleum products to the Chinese market.
Although Sinochem’s three refineries account for only a small share of national capacity, their strategic location in Shandong makes them important players in regional fuel supply.
The impact of their closure could therefore be felt on the local market, where fuel prices could rise in the short term.
However, it is unlikely that these closures will have a significant effect on a national scale.
China has excess refining capacity, and the large production units located on the country’s east coast can quickly make up for lost production.
In addition, falling demand for fuel, particularly in the industrial and transport sectors, has enabled the largest refineries to maintain high inventory levels.

Sinochem’s future strategy

The series of bankruptcies suffered by Sinochem could signal a review of its strategy in the petrochemical sector.
As the group strives to reduce its losses in a market with squeezed margins, it could turn to more profitable sectors of the energy chain, such as fine chemicals or energy distribution.
In addition, current market conditions are forcing many players in the sector to consider collaborations or mergers to consolidate their positions.
Sinochem could, for example, forge closer ties with strategic partners to reduce operating costs and secure access to crude oil resources, a key factor in maintaining its petrochemical activities.
The next few weeks will be crucial in assessing the Group’s ability to bounce back from these successive closures.
Analysts agree that Sinochem will have to review its priorities and consider a broader restructuring of its activities to adapt to an increasingly volatile market.

Register free of charge for uninterrupted access.

Publicite

Recently published in

The global oil industry prepares for further disruptions as oil prices fall below USD 60 per barrel, a level unseen since 2021. The decline in investments, particularly in the US shale sector, raises concerns.
US crude inventories increased by 200,000 barrels last week, far below analysts' forecasts. However, oil prices remain under pressure following the announcement of a potential rise in production by OPEC+.
US crude inventories increased by 200,000 barrels last week, far below analysts' forecasts. However, oil prices remain under pressure following the announcement of a potential rise in production by OPEC+.
Thousands of miners blocked the streets of La Paz on April 23, 2025, to protest the shortage of dollars and fuel, which is particularly affecting Bolivia's mining sector.
Thousands of miners blocked the streets of La Paz on April 23, 2025, to protest the shortage of dollars and fuel, which is particularly affecting Bolivia's mining sector.
OPEC Secretary General Haitham Al Ghais emphasizes the need to reconcile energy security with emission reduction goals, in light of the International Energy Agency's (IEA) approach.
OPEC Secretary General Haitham Al Ghais emphasizes the need to reconcile energy security with emission reduction goals, in light of the International Energy Agency's (IEA) approach.
The DBM-1 ST2 appraisal well confirms a significant oil discovery offshore Gabon. The Bourdon project could add up to 25 million recoverable barrels to BW Energy's reserves, further strengthening the Dussafu licence development.
Woodside Energy recorded stable production and revenues of 3,315 million USD in Q1 2025, with a notable increase in production at Sangomar, but a slight decline due to weather impacts at other sites.
Woodside Energy recorded stable production and revenues of 3,315 million USD in Q1 2025, with a notable increase in production at Sangomar, but a slight decline due to weather impacts at other sites.
Canadian company TAG Oil has completed the sale of its interests in five production permits in New Zealand to Kiwi Royalty Limited, for a total consideration of up to USD 2.5 mn.
Canadian company TAG Oil has completed the sale of its interests in five production permits in New Zealand to Kiwi Royalty Limited, for a total consideration of up to USD 2.5 mn.
The Egyptian government is launching a 75-well drilling campaign in the Eastern Desert, aiming for a 9% increase in crude output in fiscal year 2024/2025.
The Egyptian government is launching a 75-well drilling campaign in the Eastern Desert, aiming for a 9% increase in crude output in fiscal year 2024/2025.
Reconnaissance Energy Africa has signed a memorandum of understanding with ANPG to explore 5.2 mn onshore acres in Angola, expanding its operations into the Damara Fold Belt and Rift Basin.
The IMF forecasts robust economic growth for Libya in 2025 driven by oil, but warns that structural reforms are essential to avoid renewed vulnerability to global market shocks.
The IMF forecasts robust economic growth for Libya in 2025 driven by oil, but warns that structural reforms are essential to avoid renewed vulnerability to global market shocks.
The United States has sanctioned Shandong Shengxing Chemical Co., accused of purchasing Iranian oil. This move is part of the "maximum pressure" strategy against Iran, aimed at limiting its oil exports.
The United States has sanctioned Shandong Shengxing Chemical Co., accused of purchasing Iranian oil. This move is part of the "maximum pressure" strategy against Iran, aimed at limiting its oil exports.
Rönesans Holding announces a major $2 billion investment to build a polypropylene (PP) production plant in Ceyhan, Turkey, in partnership with SONATRACH and Stolt-Nielsen. This project is expected to strengthen the country’s industrial self-sufficiency.
Rönesans Holding announces a major $2 billion investment to build a polypropylene (PP) production plant in Ceyhan, Turkey, in partnership with SONATRACH and Stolt-Nielsen. This project is expected to strengthen the country’s industrial self-sufficiency.
Libya begins an international promotional tour to present 22 oil blocks, aiming to revive a strategic sector affected by years of instability.
Tullow Oil sold its stakes in the Lokichar Basin to Gulf Energy while retaining a future entry right, marking a new step in its debt reduction strategy in Kenya.
Tullow Oil sold its stakes in the Lokichar Basin to Gulf Energy while retaining a future entry right, marking a new step in its debt reduction strategy in Kenya.
US crude reserves rose by only 500,000 barrels, falling short of forecasts, while exports reached their highest level in a year.
US crude reserves rose by only 500,000 barrels, falling short of forecasts, while exports reached their highest level in a year.
Amplify Energy has amended the terms of its merger with Juniper Capital, which will inject an additional $10 mn in cash to strengthen the combined entity's financial position amid oil price volatility.
Amplify Energy has amended the terms of its merger with Juniper Capital, which will inject an additional $10 mn in cash to strengthen the combined entity's financial position amid oil price volatility.
The International Energy Agency anticipates weaker oil demand growth in 2025, driven by US tariff tensions disrupting market stability and weighing on the shale oil sector.
British group BP has announced a new oil discovery in the deep waters of the Gulf of Mexico, strengthening its investment strategy in hydrocarbons with the aim of increasing production by 2030.
British group BP has announced a new oil discovery in the deep waters of the Gulf of Mexico, strengthening its investment strategy in hydrocarbons with the aim of increasing production by 2030.
International Petroleum Corporation repurchased 277,060 common shares between 7 and 11 April under its ongoing share buyback programme, using the Toronto and Stockholm exchanges.
International Petroleum Corporation repurchased 277,060 common shares between 7 and 11 April under its ongoing share buyback programme, using the Toronto and Stockholm exchanges.
CNOOC Limited has begun production at the offshore Wenchang 9-7 oilfield, located in the western Pearl River Mouth Basin, targeting 12,000 barrels of oil equivalent per day by 2027.
CNOOC Limited has begun production at the offshore Wenchang 9-7 oilfield, located in the western Pearl River Mouth Basin, targeting 12,000 barrels of oil equivalent per day by 2027.
Petro-Victory Energy secures key assets in Brazil through strategic alliances and acquisitions, consolidating its onshore market position and initiating a new phase of development.
Trio Petroleum Corporation has completed the acquisition of producing oil assets from Novacor Exploration in the prolific Lloydminster region of Canada, consolidating its strategic presence in North America's heavy oil sector.
Trio Petroleum Corporation has completed the acquisition of producing oil assets from Novacor Exploration in the prolific Lloydminster region of Canada, consolidating its strategic presence in North America's heavy oil sector.
Road fuel volumes declined while jet fuel and non-road diesel increased, according to March 2025 data from the Comité Professionnel du Pétrole.
Road fuel volumes declined while jet fuel and non-road diesel increased, according to March 2025 data from the Comité Professionnel du Pétrole.
Chevron returned several crude shipments to Venezuela after failing to sell them due to US-imposed financial sanctions, despite holding a temporary authorisation to operate until the end of May.
Chevron returned several crude shipments to Venezuela after failing to sell them due to US-imposed financial sanctions, despite holding a temporary authorisation to operate until the end of May.

Advertising