China, the world’s second-biggest oil consumer, increased gasoline and diesel prices for the first time since March after global crude costs climbed.
The maximum at which gasoline can be sold to motorists will rise by 390 yuan ($61) a metric tonne and diesel by 370 yuan starting today, the National Development and Reform Commission said in a statement on its website yesterday. The pump price of 90-RON China III gasoline in Beijing will increase about 4.3 percent to 9,490 yuan a tonne, or $4.27 a US gallon, according to Bloomberg calculations from NDRC data. The China III specification is similar to the euro III fuel standard.
China is raising fuel prices as it faces economic growth that slowed to 7.6 percent in the second quarter, the weakest pace in more than three years. The nation cut fuel costs three times between May and July, helping truckers and motorists with the lowest pump prices since December 2010. Inflation cooled for a fourth straight month in July to 1.8 percent, data from the National Bureau of Statistics showed yesterday.
“This is the first time the NDRC increased fuel prices in a timely fashion once the threshold for doing so was reached, probably because August is not a month of peak consumption and inflation pressure has eased,” C1 Energy, a Shanghai-based commodity researcher that correctly predicted the price change before the official announcement, said on its website.
Gasoline and diesel prices are set by the NDRC under a system that tracks the 22-day moving average of a basket of crudes, including Brent, Dubai and Indonesia’s Cinta. The price of Brent futures in London rose 7.3 percent in July.
“This fuel price change is based on the current pricing mechanism and recent moves in international crude prices,” the NDRC said in a separate statement. “As of August 8, the three crude grades have risen more than 4 percent over the past 22 working days, reaching the threshold for an increase.”
The increase will help profit margins of PetroChina Co. (857) and China Petroleum & Chemical Corp. (600028), the nation’s biggest fuel producers. The companies each reported wider refining losses in the first quarter because of state-capped pump rates.