Chinese private-sector firms face refining pressure

Chinese private-sector firms Rongsheng and Hengli relied on petrochemicals to generate profits in this year's first half, despite raising run rates at their new integrated refineries.

Shanghai listed-Hengli Petrochemical performed better than Shenzhen-listed Rongsheng Petrochemical during January-June compared with a year earlier, helped by higher second-quarter purified terephthalic acid (PTA) margins.

Hengli's January-June profit rose by 113.6pc from a year earlier to 4.02bn yuan ($569mn) . The company said its 400,000 b/d Changxing refinery in north China's Dalian, which ramped up runs from May, contributed to its profitability in the first half but the higher profits was mainly because of better performance for its PTA segment.

Rongsheng's profit fell by 8.7pc to Yn1.05bn. Its 400,000 b/d ZPC refinery at Zhoushan in east China's Zhejiang recorded a Yn29.6mn loss in the first half.

Rongsheng said PTA supplies tightened in the first half of the year because of more maintenance at PTA units, while second-quarter margins also increased.

Hengli started producing gasoline in June, after selling mainly gasoline components in the first half of the year but gasoline sales volumes remain small. Rongsheng, which formally started up in the first half of this year, supplied feedstock from the refinery to its Zhongjin Petrochemical subsidiary that runs a 1.6mn t/yr paraxylene unit.

Both firms are also hoping that new ethylene capacity will create a new revenue stream. Hengli says it plans to bring a Yn21bn, 1.5mn t/yr ethylene plant and other derivative units on stream by the end of this year, targeting a full start-up by early 2020. Rongsheng is adding 1.4mn t/yr of ethylene capacity at its ZPC refinery, which is also likely to start up by the end of the year.

source: Argus Media