Can you believe it? Losses in the refining segment? ?

1 barrel of crude oil costs $95; with a density of 0.85, 1 ton of crude oil costs over 5,200 yuan. Gasoline and diesel generally cost between 6,500 and 7,000 per ton; the price of light products is around 70-80 per ton. This amount roughly offsets the cost of crude oil. The remaining 20-30 percent comes from energy consumption – about 10 percent is accounted for by coke or asphalt, which costs around one to two thousand per ton. Workers need to support their families, and there are also many other financial expenses. How can there be no losses? Fortunately, most refineries have some kind of profit margin, which allows people to have enough to eat and wear. This process can’t really be called refining. As for Russia…

The refining segment is indeed losing money; take Sinopec as an example – its losses are enormous. There’s nothing that can be done about it, as crude oil is too expensive, and at the same time, there’s no allowance for an increase in the prices of refined products, which goes against the principles of a market economy. Drivers, please don’t attack me; the price of refined oil is indeed too low, and there’s a lot of smuggled oil out there.

This year is another good year for private enterprises in China’s petroleum industry; with diesel at 8,000 per ton, it’s unlikely for such companies to incur losses. However, Sinopec may not necessarily incur losses in certain regions either. As far as I know, in some areas, although Sinopec’s refined oil prices have not increased, the price at which they purchase oil from private enterprises is significantly higher than the price at which individual consumers buy oil. Moreover, since Sinopec is a major supplier for these enterprises, their profits are reduced as a result.

Large refineries are surely losing money at current oil prices. The price of refined oil in China is similar to that on the international market, but since value-added tax is included, the actual price is much lower. Affected by high oil prices, downstream petrochemical industries in East Asia are generally suffering losses. Small refineries that process slag oil and used oil can achieve decent profits as long as the supply channels are stable. Yet large refineries bear heavy economic responsibilities; they must keep operating even if it means incurring losses. Originally, the operating rates of large refineries in the country were decreasing steadily; however, recently, under strong pressure from the National Development and Reform Commission, they have begun to increase their refining capacity in order to ensure supply. But in any case, China also belongs to the category of countries with low incomes and high prices worldwide, while the wealthy United States has low prices. It’s all the exchange rate’s fault. Below is an article from the American magazine Newsweek for your reference: http://news.*nhuanet.com/world/2007-11/27/content_7150904.htm

We are a company affiliated with CNPC, and our financial projections show losses of hundreds of millions of yuan every month this year. Of course, this is considered a policy-related loss; the main reason is that crude oil prices have remained high this year. Additionally, due to certain controls, the refined products produced by our refineries cannot be exported and must be sold domestically at relatively lower prices. Among the companies under CNPC today, the upstream oil extraction firms are extremely profitable, while our downstream refineries are mostly losing money.

Refineries must never incur losses. First: The price of crude oil at $90 per barrel does not apply to all crude oils; it refers to the price of high-quality low-sulfur light oil. By \"light oil\" here, we mean crude oil from which 30% can be separated as gasoline distillates. Which refineries in China use this type of raw material? Many refineries in China use imported crude oil of very poor quality, and they enter into long-term supply contracts at prices **below $90 per barrel; such prices are also less affected by futures markets. Secondly, when the costs of exploration and oil field development are added to the cost of crude oil produced in China, the price per barrel is around $11. Selling this oil at a high price to its own refineries or exchanging it for goods with companies such as CNPC and Sinopec constitutes a related-party transaction aimed at shifting profits, and it is not a true loss. Third: The processing cost per ton at refineries is approximately 100–200 RMB per ton (varies depending on the quality of the oil). Fourth: Although the prices of refined oil products are controlled, the prices of chemical raw materials are not restricted. One can take a look at how much the prices of ethylene, propylene, polyethylene, polypropylene, synthetic rubber, BTX, etc. have risen, and also see how much the prices of lubricants have increased – these all represent the profits generated by refineries in their downstream operations. Fifth: The catalytic cracking catalyst at 23,000 yuan per ton is an acrylic acid production catalyst developed by the China Academy of Petroleum Sciences; if imported FCC catalysts are used, the price is approximately 1,800 dollars per ton. In summary, the refinery’s losses are >>>>>>>>

The news from CCTV-2 that I watched yesterday: **Diesel: 17.85 yuan per liter, Shenzhen: 5.75 yuan per liter. With such a huge price gap, can CNPC and Sinopec, located in Shenzhen on the mainland, resist such alluring massive profits? ?

In fact, this is a matter of global and local considerations; any enterprise, especially large enterprises that are under control, must also comply with certain requirements beyond purely economic interests. China’s two major oil companies each have a variety of business activities. What is being discussed here is the loss incurred in their refining operations; this is caused by unified regulations on the prices of refined oil products – otherwise, there would be no need to impose restrictions on their export. The issues involved here are too complex to be explained in just one or two sentences, but generally there are three aspects: first, the prices of refined oil products are not aligned with international standards ； Secondly, under the current circumstances, protecting refined oil means sacrificing the raw materials for downstream chemical processing units ； Third, crude oil prices are high, but the overall profitability is not necessarily the best.

The price provided by the original poster seems to be inaccurate. Below is information gathered from the Internet: Market conditions for fuel oil in Huangpu, South China: http://msn.futures.bbs.hexun.com/msnviewarticle.aspx?page=6&aid=33597265&bid=6 2007-11-29 10:14:55 -------------------------------------------------------------------------------- On Wednesday (November 28th), due to the continued sharp decline in crude oil prices, Singapore’s spot prices fluctuated slightly downward, with importers in the Huangpu market reducing their quotes. Based on the Singapore high-sulfur benchmark of 180 Cst, the transaction price has been reduced by 20 yuan; the transshipment price has been lowered to 4070–4090 yuan per ton, while the pick-up price has also been set at 4070–4090 yuan per ton. Spot trading in Huangpu; imported from Singapore, 180cst; no quotes for transshipment goods ； Some importers have reduced their quotes by 100 yuan per ton, to around 4,300 yuan per ton ； The buyers’ bid prices have remained stable at the level of 3,680–3,750 yuan per ton. The highest bid and lowest ask prices are 3,750/4,300 yuan per ton, respectively; the price difference between buy and sell is 550 yuan per ton. Crude oil futures fell on Tuesday, dropping sharply in the early session by more than $3, closing at $94.42 per barrel. Affected by this, the prices of paper goods in Singapore fluctuated and declined; in December, the price of such goods in Singapore was around 491 dollars, down by about 3 dollars from the previous day. Regarding imports to the Huangpu market: Today, importers in the Huangpu area have reduced their quotes by around 50 yuan, with prices at around 4,250 yuan per ton. Many traders choose to switch to products such as slurry. Huataixing’s imported 180CST in Singapore has seen its price reduced by 50 yuan, to 4250 yuan per ton ； The price of Foshan Sanshun Singapore 180CST has also been reduced by 50 yuan, to 4,250 yuan per ton. Guangdong Chint Energy Singapore 180CST, with a price of 4,300 yuan per ton ； Sinopec Petroleum imports UAE crude oil with a viscosity of 180CST in Guangdong; the price remains stable at 4,450 yuan per ton, and sales are fair. The 180 market is in a balanced state: most traders maintain stable quotes, with overall prices ranging between 4,220 and 4,230 yuan per ton, and sales conditions are satisfactory. The price of Sinopec Zhonghai Harmonization 180 CST remains stable at 4,230 yuan per ton; sales are proceeding normally, and it is mainly supplied for use in ships. The price of Guangzhou Taiheng’s products remains at 4,220 yuan per ton, and sales are good. Guangzhou Jinbilun has suspended its external quotes today. Sinopec Guangdong domestically produced blended low-sulfur 180CST has a stable price of 4,150 yuan per ton, with discounts available for purchases. On the side of refineries: Some refineries have raised their quotes for residue, with current prices for residue ranging from 3,400 to 3,700 yuan per ton. Yingchang in Heshan has raised its prices across the board; the price of residue oil has increased by 100 yuan per ton, reaching 3,700 yuan per ton ； The price of first-tier oil is 7,000 yuan per ton, while that of second-tier oil is 6,000 yuan per ton; the manufacturers say that sales are going well. Panyu Huahong has no stock available today and has suspended offering quotes to external clients. The price of Panlong residue oil remained stable at 3,400 yuan per ton, with average sales performance. Nanfang Petrochemical leases out its three refineries, namely Dongguan Chaojie, Shanshui Futeng, and Rongtai. The price for residue oil is 3,500 yuan per ton, and sales performance is decent. The price for first-grade oil is 6,400 yuan per ton, while that for second-grade oil is 5,700 yuan per ton. The price of Sanshui Longchi residue oil is 3,550 yuan per ton, with discounts available for actual transactions. The prices at Maoming Petrochemical remain stable; the prices for medium-to-high sulfur content 250CST oil, 7# light fuel oil, and slurry are all 3,500 yuan per ton, with steady sales volume. The price of residue oil in Dongxing, Zhanjiang, remains stable at 3,550 yuan per ton as yesterday, with decent sales performance. The price of high-sulfur oil slurry at Hainan Refining & Chemical is 3,400 yuan per ton, while the actual transaction price is around 3,300 yuan per ton; the resources mainly go to the Pearl River Delta region. Regarding the arrival of goods: The ship \"Sea Lion\" is continuing to unload at anchorages 15 and 16 in Sha Jiao, with approximately 76,000 tons of cargo still on board ； “The vessel Voladi, carrying 27,920 tons of UAE oil, is expected to arrive at the port on the 30th; its anchorage location is yet to be determined ； “The vessel \"Huanghai\" is carrying 62,790 tons of oil from the UAE, and is expected to arrive at the port on the 30th; its anchorage location will be determined later. Appendix: Transfer price (spot) for Singapore high-sulfur 180 CST 4070-4090 -20; Price increase upon delivery (spot) for Singapore high-sulfur 180 CST 4070-4090 -20. Price increase upon delivery (spot) for Russian M100 4810-4830 -10; Discount of 23-25 US dollars for Russian M100. CFR Singapore at the middle to late part of December for Singapore high-sulfur 180 CST 4155-4165 -20, FOB (delivery period of 5-20 days). The ex-plant price at refineries differs from the retail price in the market, with a current difference of around 1000 yuan per ton.