JPM | The Case for Refining Laggards, China Breaching Aluminum Capacity Cap? Sinopec Restructuring, BHP first take, soft PPI

Research evidence excerpt

JPM | The Case for Refining Laggards, China Breaching Aluminum Capacity Cap? Sinopec Restructuring, BHP first take, soft PPI

Specialist Sales

APAC Specialist Sales J P M O R G A N

16 July 2026

JPM | The Case for Refining Laggards, China Breaching

Aluminum Capacity Cap? Sinopec Restructuring, BHP first take,

soft PPI

Anmol Mehta

+852 2800 8896

anmol.mehta@jpmorgan.com

Good morning,

Good morning, yesterday’s top 5 biggest movers were all the refiners - SK Inno +12%, Thai Oil +10%, FPCC +10%, S-Oil +7.5%

as we continued to get escalations and supportive data supporting the higher for longer cracks thesis. 1) China’s independent

refinery utilizations fell to 42% this week (lack of crude) and are expected to fall further through July as China enters peak

maintenance season. The Koreans are running at similar (sub 50%) levels and Ukraine’s daily attacks on Russian refineries

continue (yesterday Ukraine took out Salavat complex: 2.7% of Russian fuel supply where both the CDUs are damaged & could

take months to repair). The Russia Ukraine situation is longer dated than most people think – and strikes are likely to continue

uptil Russia’s legislative elections (Sept 18-20) as a deliberate means to raise domestic inflation & unrest with an already

unsatisfied Russian public.

The market has only rewarded pure play refiners ytd - S-Oil +70%, Thai Oil +60% and GS/Bangchak +50%. In our view the

laggards are due a bid – Refining is Reliance’s(-17% ytd) single largest revenue contributor (feeding through to O2C which is

63% of Revenues), and headlines this week have been supportive – Indian fuel exports are up 50% m/m (20% y/y) according to

Kpler, and export taxes were cut 30% for diesel/ 50% for Jet Fuel this month.