China controls gasoline and diesel prices to limit their impact on inflation....
Profit at Sinopec, China's largest oil refiner, may peak in the first quarter of this year as crude oil prices rebound, reducing margins from producing fuels at state-controlled prices, UBS AG said.
China controls gasoline and diesel prices to limit their impact on inflation, hobbling Sinopec's ability to profit from fuel demand in the fastest-growing major economy. The company, which imports almost three-fourths of the crude it processes, has forecast a more than 50 percent jump in first-quarter net income.
'Sinopec has been suffering from crude oil price risk, weak upstream fundamentals, a slowing marketing segment, and huge capital expenditure investment in refining and petrochemicals,'' the Hong Kong-based analysts wrote in the research note. ``The good first-quarter result is only driven by a lower crude oil price in the period December 2006 to February 2007.''
The company's shares, up 44 percent in the past six months, fell 2.5 percent to HK$7.10 by the Hong Kong market's 4 p.m. close, the largest one-day drop for a month.