China, Asia’s biggest oil consumer, increased retail gasoline and diesel prices for the first time this year, aiding state refiners under pressure after crude rose above $100 a barrel.
Gasoline and diesel yesterday rose by 350 yuan ($53) a ton, or as much as 4.6 percent, the National Development and Reform Commission, the top economic planner, said on its website on Feb. 19. Gasoline in Xinjiang, with the lowest prices among all Chinese cities, cost 8,265 yuan a metric ton and diesel was at 7,630 yuan a ton before the increase.
The government boosted prices after crude in London rose above $100 a barrel as civil unrest in the Middle East threatens to disrupt supplies. China Petroleum & Chemical Corp., the nation’s largest oil refiner, and PetroChina Co., the largest oil producer, last saw an increase for gasoline and diesel on Dec. 22 when the state-capped prices were raised 4 percent.
“This isn’t enough if we benchmark against how crude has risen. We’ll need another price increase,” Brynjar Eirik Bustnes, an analyst at JPMorgan Chase & Co., said by telephone from Hong Kong. “This one will allow refiners to avoid bigger losses but certainly it’s not going to give them profits.”
Brent crude on the ICE Futures Europe exchange in London has risen 9.5 percent since China’s last fuel price adjustment, reaching a 2 1/2-year high during the past week.
Based on a mechanism introduced in December 2008, the NDRC can revise fuel prices when crude costs change by more than 4 percent over 22 working days.
The ex-factory cost of No. 3 jet fuel will reach 6,340 yuan a ton, rising from 5,990 yuan, according to a separate statement posted on the NDRC’s website on Feb. 19.
Higher gasoline and diesel prices will add to costs for manufacturers and farmers. Consumer-price inflation accelerated to 4.9 percent in January from 4.6 percent in December.
For 2010 as a whole, consumer prices rose 3.3 percent, breaching a government target of 3 percent.
The latest fuel price increase may add 8 basis points to the consumer price index in February month-on-month, Lu Zhengwei, a Shanghai-based economist at Industrial Bank Co., said in an e- mailed note yesterday.
China, the world’s biggest new-car market, may raise gasoline prices by 20 percent this year to promote energy efficiency, according to Mirae Asset Securities Co. That will strain once-subsidized drivers who barely two years ago paid less than Americans to fill their tanks.
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