The central government will cut mainland petrol and diesel prices by about 3 per cent from today, in the latest round of adjustments to keep in line with global crude oil prices.
The move will slash refining profit at the nation's two largest refiners, China Petroleum & Chemical Corp (Sinopec) and PetroChina, but will cut fuel costs for hundreds of millions of motorists. Airlines will also benefit.
Retail consumers will pay 220 yuan (HK$250) per tonne less on petrol and diesel, according to a statement issued by the National Development and Reform Commission last night.
Prices vary between regions. Beijing petrol prices have been cut by 2.77 per cent to 7,710 yuan per tonne, compared with a 2.93 per cent reduction to 7,280 yuan in Shanghai. Diesel prices fell 3.03 per cent in the capital and 3.26 per cent in the east-coast financial centre.
Jet fuel prices have been cut by about 5.5 per cent, with the No1 jet fuel's ex-factory price cut to 4,650 yuan a tonne from 4,920 yuan.
Analysts said the price cut was within their expectations, noting that since December last year, Beijing has implemented a new price mechanism that closely ties domestic fuel prices to international crude price movements as long as crude prices are below US$80 a barrel. When it exceeds US$80, refiners will see lower profit margins as the linkage will be broken. When it exceeds US$130, they will see losses due to price controls, but which will be partly offset by compensation from state coffers.
