BIZCHINA / Opinions
PetroChina's price drop fuels talk of change
(Shanghai Daily)
Updated: 2007-03-16 08:56
Although PetroChina Co claimed its move to cut street gasoline prices
last week was a temporary and regional promotion, analysts said it might
signal the trend of more flexible fuel pricing as competition increases.
Usually, PetroChina and rival Sinopec Corp, which dominate China's
fuel-sales market, set the same gas prices. Independent pump-station
operators are forced to offer the same prices as they are constrained by
PetroChina and Sinopec in fuel supply.
However, PetroChina's month-long discount program, starting last Thursday
in about 100 of its select stations in Beijing, broke its price alliance
with Sinopec. In past years, any rate adjustment was directed by the top
planner, the National Development and Reform Commission.
"This is a promotional event, aimed to reduce our inventories in the
north and return some profit to our customers," a Hong Kong-based
spokesman for PetroChina said. "It won't be developed as a nationwide
program."
One analyst said it was the weather that led to PetroChina's increasing
inventories in Beijing. Some of PetroChina's fuel cargoes to the south
were delayed due to the cold weather.
PetroChina cut pump prices in Beijing by between 0.05 yuan and 0.2 yuan
(2 US cents) a liter, depending on their locations. That's about a
reduction of two percent to five percent, according to UBS AG.
This could boost sales volume by up to a third at discount PetroChina
stations, local Beijing media quoted industry sources as saying.
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