CIBC Research Investment Researcher Liang Bin told CBN that this profitability reflects the achievements of China's oil industry's midstream and downstream businesses. Because the two major oil companies (PetroChina and Sinopec) have a strong monopoly in the domestic oil industry, the transcripts of the industry can basically explain the performance of the two oil companies in the midstream and downstream.
The timely adjustment of refined oil prices by the government this year and the operation of a new price mechanism on schedule is the key to achieving better profitability for oil companies.
In the same period of last year, the price of crude oil was extremely high, and the sales price of domestic refined oil was not in place, making it difficult for business operations. During this period, although the international oil price had a short-term correction, from 90 US dollars to 80 US dollars / barrel or so, but most of the time they walked between 90 to 110 US dollars / barrel.
In the first four months of this year, with the formalization and smooth implementation of the new refined oil pricing mechanism, there has been a fundamental shift in the large-scale harvest of oil refining and refined oil sales.
The core content of this mechanism can be understood as the domestic sales price of refined oil, which is adjusted appropriately following the fluctuation of crude oil prices.
"But in May, the profitability of the two oil companies will be lower than the previous four months." Liang Bin said, "In May, international oil prices rose by more than 20%, but the domestic delay has not adjusted the refined oil sales price, the mechanism is basically out of order. Domestic companies, especially Sinopec’s more than 70% of its crude oil comes from overseas, its upstream procurement costs are high, downstream sales prices of refined oil are not yet in place, and the company is difficult to obtain a good profit.So, the profits of the petroleum processing and coking industry, Ultimately, we must look at the implementation of the refined oil pricing mechanism, Liang Bin said.
Refinery industry profitable
Statistics from the National Bureau of Statistics show that among the 39 sub-industries' profits of the former April industry, the most profitable ones are the petroleum processing and coking industries. The industry created a profit of 16.66 billion yuan, a year-on-year increase of 181.3%.