China to Raise Gasoline, Diesel Prices From Tomorrow, C1 Says
China will increase gasoline and diesel prices from tomorrow after crude costs gained, according to C1 Energy.
Retail gasoline will rise by 550 yuan ($87) a metric ton and diesel by 540 yuan, the Shanghai-based commodity researcher, which has correctly reported previous adjustments before official announcements, said on its website today.
The increase, if confirmed by the government, may help boost profit margins at China Petroleum & Chemical Corp. (600028) and PetroChina Co., the nation’s biggest oil processors. Sinopec, as China Petroleum is known, posted its lowest six-month profit since 2008 amid losses at its refining unit because of state- controlled fuel prices. PetroChina’s net income in the first half of this year slid 6 percent even as its average crude selling price increased 6.3 percent.
China’s fuel rates are set by the National Development and Reform Commission, the nation’s top economic planner, under a system that tracks the 22-day moving average of a basket of crudes comprising Brent, Dubai and Indonesia’s Cinta. The government may make adjustments when the measure moves more than 4 percent from the last change. It had risen 8.4 percent as of Sept. 7 since prices were increased last month, according to C1.
Sinopec posted a loss of 18.5 billion yuan from processing 811 million barrels of oil in the first half of the year, the company said in a stock-exchange filing on Aug. 26. PetroChina incurred a loss of 23.3 billion yuan from refining 489.7 million barrels, it said in an Aug. 23 filing.
The NDRC has indicated that it may change the pricing system for refined products in the second half of the year, Zhou Jiping, PetroChina’s president, said after the earnings release. The revisions are expected to reduce the company’s refining loss, he said.
China will let oil companies set fuel prices according to guideline rates posted by the government as part of planned reforms, Xinhua reported March 28, citing Peng Sen, a former vice chairman at the NDRC. The new system may also shorten the pricing cycle to 10 days from 22 days and replace Indonesia’s Cinta with New York-traded West Texas Intermediate oil, China Petrochemical Corp., the parent company of Sinopec, said in its online newsletter March 28.
C1 reported before the Hong Kong stockmarket closed that fuel prices would increase by about 500 yuan a ton, while giving more-specific figures after trading ended. Sinopec rose 1.3 percent to HK$7.08, while PetroChina was unchanged at HK$9.37. The benchmark Hang Seng index gained 0.1 percent.
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