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CNPC and Sinopec are at Price War?
China's two largest oil giants claim they have no intention in staging a price war in the retail market of refined oil.
The claim came in the wake of reports that China National Petroleum Corp (CNPC) and China Petrochemical Corp (Sinopec Group), for the first time, cut down the retail price of gasoline by differing margins in Shanghai, to fight for their market share, after the government lowered the August benchmark price for refined oil products on Sunday.
Sinopec dropped the price by 6.59 per cent to 2.41 yuan (29.1 US cents) a litre and the rival CNPC by 8.53 per cent to 2.36 yuan (28.5 US cents) a litre.
"The price cut in Shanghai is based on the State's benchmark price and on the local market demand, a Sinopec spokesman said. "It has nothing to do with a price war.''
The official said prices in other major cities, such as Beijing, is fully in compliance with the benchmark price.
On Sunday, the State Development Planning Commission announced it had reduced the benchmark price for gasoline and diesel by 8.3 per cent and 1.6 per cent respectively, in response to the price drop in the international market. The two State-owned companies, which control half of the market, are allowed to raise or drop the benchmark price by 5 per cent, at the most, to set their retail price.
The official said CNPC's price is cheaper, because their cost for crude oil is lower.
A CNPC spokesman also denied the price war charge, adding that the government would not allow the two companies to fight each other.
"The State Economic and Trade Commission recently convened a meeting, urging us to join hands to keep the market order,'' said the spokesman. "It is impossible for the two companies to launch the price war nationwide.''
At the meeting, Shi Wanpeng, vice-minister of the commission, said the two companies, which control the wholesale market, should curtail their refined oil production to push the market price back to normal.
The move is expected to boost the sales in the oversupplied market, which has suffered from falling prices for months after petrol stations -- run by the local government and private companies -- pushed their prices far below that of the two giants.
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