Sinopec to reduce operations after freight rates soar

Lower output: A file picture showing an employee walking past oil tanks at a Sinopec refinery in Wuhan. The company could reduce total processing by one million tonnes of oil in December. — Reuters

SINGAPORE: China’s biggest refiner plans to reduce operations from next month after a surge in the cost of shipping crude eroded margins, according to sources.

Freight rates have skyrocketed since the United States announced sanctions on Chinese shipowners in late-September, triggering a flight from vessels owned by affected companies and a bidding war for alternative tankers. That’s driven up the cost of importing crude and is cutting into the profits made from refining.