Oct 29, 2020 07:44 PM

Private Refiner Outperforms Oil Majors, in Part Due to Face Mask Demand

Hengli Petrochemical’s profit was up 56.6% year-on-year in the third quarter.
Hengli Petrochemical’s profit was up 56.6% year-on-year in the third quarter.

While the big dogs of China’s oil sector have struggled this year as prices and demand were depressed by the coronavirus pandemic, one privately owned refiner has turned a profit of nearly $1.5 billion in the first nine months.

Hengli Petrochemical Co. Ltd. made a profit of 4.38 billion yuan ($651.6 million) in the three months to September, up 56.6% year-on-year and bringing its profit for 2020 so far to nearly 10 billion yuan, according to a filing to the Shanghai Stock Exchange on Thursday.

That performance bests that of the big three state-owned conglomerates. China Petroleum & Chemical Corp., also known as Sinopec, recorded a loss of 30 billion yuan for the first half of the year before swinging back to profit in the third quarter, while PetroChina Co. Ltd. lost 22.9 billion yuan in the first six months. CNOOC Ltd. recorded a 10.3 billion yuan profit in the third quarter, down nearly two-thirds year-on-year.

The Dalian-based company is thanking its structure, which stretches into downstream products for which demand has been more stable. Before going public via backdoor listing in 2016, the firm was a department under Hengli Group Co. Ltd. producing chemical fibers — of which refined oil products are a major raw material. Hengli Group later transferred its petroleum assets to the firm when it floated on the Shanghai bourse.

The vast downstream business which generates consistent demand for its refined oil products — including from manufacturers of face masks, an area which has seen huge growth this year due to the pandemic — has helped shore up the company’s finances.

Refined oil product sales picked up 8% year-on-year to 1.84 million tons for the first three quarters.

Hengli Petrochemical has invested in expanding its production and storage capacity this year. An ethylene project with annual production capacity of 1.5 million tons began operating in July, and Hengli Petrochemical’s own refineries supplies 98% of the raw material it consumes, the company said.

The firm’s chemical-product production more than tripled to 16.5 million tons in the January to September period, and it sold some 13 million tons.

To take advantage of low oil prices this year, Hengli Petrochemical built 24 oil storage tanks with a combined capacity of 3.6 million cubic meters, taking its total storage capacity to 6 million cubic meters, said the filing. The cost of the firm’s crude oil imports slumped 34.9% year-on-year to 2,197 yuan per ton for the first nine months.

Contact reporter Lu Yutong ( and editor Joshua Dummer (

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