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(Bloomberg) — Sinopec reported a steeper-than-expected decline in profit for 2025 as faltering fuel demand and an over-saturated chemicals market sapped margins. 

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China’s biggest oil refiner saw full-year net income fall 34% to 32.5 billion yuan ($4.7 billion), according to an exchange filing on Sunday. The company, officially known as China Petroleum & Chemical Corp., recorded a profit of 49 billion yuan in 2024. 

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The slump reflects the company’s operational challenges as China powers ahead with a renewables energy push. Retail sales of petroleum and related products fell 5.7% nationwide last year, with the government pushing refiners to produce less fuel and more petrochemicals and the country’s electric-vehicle boom weighing on consumption of diesel and gasoline. 

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The petrochemicals sector has homegrown problems, too, as a wave of new plants in China saturate the market and squeeze product margins. BloombergNEF expects global net ethylene and propylene additions in 2026 to reach a record 27.7 million metric tons a year — almost double the annual average in the period from 2020 to 2025. 

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The Iran war is exacerbating the situation for Sinopec, which now needs to manage historic volatility in the oil market after Tehran effectively shut down the key transport waterway for crude, the Strait of Hormuz. Difficulty obtaining feedstock forced the company trim run rates 10% earlier this month.

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While Sinopec expects demand for natural gas and chemicals to grow this year, it sees demand for refined oil weakening as a result of the rise of renewables and increasing uncertainty over global oil prices.

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—With assistance from Wenshan Luo and Tian Ying.

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