Declining demand and a weakening economy in China has meant that demand for oil products has declined. Refinery utilization rates have declined and the gross refinery margins (GRMs) are pulled down by the sluggish economy.
Major refineries like PetroChina Company Limited (ADR) (NYSE:PTR) (SHA:601857) and China Petroleum & Chemical Corp (ADR) (NYSE:SNP) (HKG:0386) (Sinopec) have been suffering the impact of declining margins. Throughout 2011 and 2012, the Chinese integrated companies have been suffering hefty negative margins in their refinery business segment. This was during a time when oil prices were relatively stable, so the foremost impact on the companies’ profitability had come...


