The average retail gasoline and diesel price will rise by 320 yuan ($47) a metric ton, the National Development and Reform Commission said on its Web site yesterday. The NDRC said the fuel price gain will add 7 basis points to the April consumer price index month-on-month.
The increase will boost costs for manufacturers and farmers and may add to inflationary risk as the Chinese economy, the world’s third biggest, expanded at the fastest pace since 2007 in the fourth quarter. China Petroleum & Chemical Corp., the nation’s biggest refiner, will benefit from the adjustment after crude oil costs climbed almost 6 percent since November, when the government last raised prices.
Refiners need an increase of between 400 and 500 yuan per ton to cover gains in crude oil costs, Brynjar Eirik Bustnes, an analyst at JPMorgan Chase & Co, said by telephone in Hong Kong. A revision lower than 400 yuan wouldn’t have a “meaningful impact” on inflation, he said.
Diesel prices in western Xinjiang province will be set at a maximum of 7,330 yuan a ton, a 4.6 percent increase. The price of 90-octane gasoline in Beijing, was fixed at 8,620 yuan a ton (93 cents a liter) and diesel at 7,950 yuan a ton. Pump prices for regular gasoline in the U.S. are about 75 cents a liter, according to data from the Energy Information Administration.
Yuan Speculation
The fuel price change comes amid speculation that China will allow the yuan to appreciate by June 30 to help curb inflation. China’s consumer prices rose 2.7 percent in February from a year earlier, the biggest gain in 16 months. Crude oil futures in New York have risen about 68 percent in the last 12 months and were at $83.86 a barrel at 7:27 a.m. in Singapore.
China Petroleum, also known as Sinopec, said last month the profit from turning crude oil into fuels was “very low” in the fourth quarter and may have fallen further between January and March. The refiner imports about 80 percent of its crude oil requirements.
China has now adjusted prices nine times since introducing a mechanism in December 2008 that allows the government to revise prices when crude-oil costs change more than 4 percent over 22 working days.
The government controls fuel prices to keep inflation in check. Prices were adjusted twice in 2008 before the pricing mechanism came into effect.
