China may raise prices of refined oil products later this month to link the domestic price of gasoline and diesel closer with global crude prices, said industry insiders.

China may hike refined oil rates [CFP]

This would be the second price hike of domestic refined oil products this year. China raised the price of gasoline and diesel by 290 yuan and 180 yuan per ton respectively, or 3-4 percent, on March 25.

"In my reckoning, this round of price hikes would be around 350 yuan per ton," Zhong Jian, an oil analyst told Shanghai Securities News.

In Guangdong province, China's two leading oil companies, PetroChina and Sinopec, have jointly pushed up domestic refined oil wholesale prices recently, local media reported. In the Pearl River Delta region, the two oil behemoths have hiked average wholesale prices of diesel oil to 5,000 yuan from 4,100 yuan per ton.

China will adjust oil prices more frequently this year, said the country's top economic planning body, the National Development and Reform Commission (NDRC).

Peng Sen, vice-minister of the NDRC, earlier said that this year's fuel price adjustments would be done via a new pricing system, which would take into account movements in global crude prices over a 20-day period.

The government will consider adjusting refined oil products prices if the global crude price rises or falls by 4 percent or above over 20 days, he said.

Peng did not disclose whether the 4 percent fluctuation limit will trigger domestic fuel price adjustments every time, but the formula makes it easier to project when to adjust fuel prices.

Lin Boqiang, a professor at Xiamen University yesterday told China Daily that, as of now, the price adjustment on refined oil products domestically will not have a big impact on refiners because global crude prices are relatively lower at the moment.

International crude prices currently hover around US$50 per barrel. The price touched a record high of US$147 per barrel in July 2008.

Last year, the gap between high crude prices on the international market and the relatively low prices of refined oil products domestically pushed China's refiners deeply into red. The country's largest refiner, Sinopec, said earlier that its refining business incurred losses of 61.5 billion yuan in 2008.

China imported 16.34 million tons of crude oil in March, according to the General Administration of Customs.

(China Daily April 16, 2009)