Hongkong listed Zhenhai Refining & Chemical said it has refined 30% more crude oil in the first half of this year to meet China’s rising oil products demand.

But analysts are unsure if that will translate into fatter profits as Beijing continues to hold oil product prices down fearing a resurgence of inflation, analysts told the Hongkong Standard.

“In terms of volume growth they had a very strong second quarter but there was severe margin pressure as oil prices went up to US$42 a barrel,” Daiwa Institute of Research analyst Rachel Tang told Hongkong Standard.

The company, with some of the most sophisticated and efficient refining equipment in China, saw throughput of 8.11 million tonnes, or 334,200 barrels a day – up from 6.23 million tonnes in the first half of 2003.

Earlier, PetroChina said its refining throughput had risen 16.9% while the sector as a whole saw crude processing grow 18% to 133.9 million tonnes, or 5.52 million barrels per day. The double-digit growth is not a surprise, Deutsche Bank analyst Christine Pu said, since China’s appetite for oil and oil products continues to grow.

“Demand for petroleum products has been rising substantially since June last year,” Ms Tang said. But all that oil flowing may not lead to better profits for Zhenhai, a unit of oil giant Sinopec which also does its own refining, or the country’s other major refiners.

Beijing strictly controls the prices companies can charge for their products, always keeping them low enough to maintain growth regardless of international crude oil prices.