China to raise petrol and diesel prices 4 to 5pc
BEIJING, Aug 9 – China, the world’s second-largest fuel user, will raise retail prices of petrol and diesel between 4 per cent and 5 per cent from tomorrow to track climbing crude prices, in a move that could help pare refining losses at oil firms.
The increase is the first after three price cuts earlier this year as oil demand in China, which makes up nearly half of global oil demand growth, waned through the second quarter, following tepid growth in the first.
With effect from tomorrow, the ceiling for retail prices will rise 390 yuan (RM189.34) per tonne for petrol and 370 yuan per tonne for diesel, the National Development and Reform Commission (NDRC), the country’s top economic planner, said in a statement posted on its website late today.
The much-anticipated increase, reversing a fall of nearly 14 per cent through three cuts between May and July, may entice some oil plants to raise production and thus lift implied oil demand, but real end-user consumption remained lacklustre.
“We are still worried about real end-user demand because of the broader economic outlook, which looks still very uncertain for a strong rebound,” said a fuel marketing official with Sinopec Corp.
Annual growth in China’s factory output slowed to its weakest in more than three years in July, missing market forecasts and raising expectations that Beijing will make further policy moves to support an economy that has been sliding for six straight quarters.
The hike was prompted by rising benchmark global crude prices , which had climbed 7.2 per cent by yesterday since China’s last price change on July 11, the NDRC said.
An increase in crude benchmarks by more than 4 per cent over a 22-working-day period typically triggers a hike under China’s current pricing regime, though the government more often than not postpones any rise, wary of inflationary pressure.
But this time, the hike was prompt, as tomorrow will be the 22nd working day exactly after the previous change, possibly indicating an attempt by the government to help refiners, which have sunk deep into the red over the past few months.
Easing inflation also provided a good window, with China’s annual consumer inflation falling to a 30-month low in July. – Reuters