| BEIJING, March 21
BEIJING, March 21 China may consider cutting
retail fuel prices as early as next week after a fall in
benchmark crude prices hit a trigger point under the country's
fuel pricing mechanism, data from an energy consultancy showed.
Any cut would come as the industry awaits an overhaul of
China's current system, replacing it with a more market-based
scheme that would allow refiners to respond more quickly to
changes in world prices.
At present, an increase or fall in crude benchmarks by more
than 4 percent over a 22-working-day period typically triggers a
price rise or cut.
The 22-day moving average price of Brent, Dubai and
Cinta on March 20 was 4.37 percent below the level when China
last adjusted fuel prices, data from ICIS C1 Energy showed.
The government may only consider a cut next week, about a
month after the last fuel adjustment on Feb. 25 when the prices
of gasoline and diesel were raised about 3 percent.
China is working to revamp its fuel pricing system and the
industry expects Beijing to launch a new scheme, possibly in the
coming months, that would scrap the 4-percent trigger and allow
refiners to adjust domestic prices more swiftly.
Such a move would boost refining margins and could help curb
excessive fuel use.
The world's second-largest oil consumer imported about 58
percent of its crude requirements in 2012, and the proportion of
imports is expected to rise as domestic demand increases.
Yu Xizhi, president of Maoming Petrochemical Corp, the
second-largest plant of China's biggest refiner Sinopec
, told Reuters last week that Beijing may
shorten the fuel price review period to five working days.
"Scrapping the four percent threshold for revision will
reduce speculation. The government will adjust fuel prices every
five working days," Yu said, adding that the new scheme would
still include a guaranteed profit margin for refiners.
China raised and lowered fuel prices four times each last
year, although the government sometimes delayed the adjustment
due to worries about stoking inflation.
Yu said China could have raised fuel prices by another $12 a
barrel last year to fully match changes in global crude prices.
"Sinopec's refining business should have enjoyed a big
profit rather than sustaining a big loss if the government had
raised fuel prices enough to match crude prices," he said.
Zhao Rifeng, president of Sinopec Jinling refinery in the
eastern Jiangsu province, told Reuters this month that a new
fuel pricing scheme would not completely liberalise prices.
"The gap between current fuel prices and liberalised prices
is big. Entirely liberalised fuel prices means consumers will
bear more fuel cost," he said.
(Reporting by Judy Hua and Chen Aizhu; Editing by Richard