China Petroleum & Chemical Corp (Sinopec) is offering 0.1 yuan on Sunday discount off all products at its Guangzhou branch.

 

The promotion, kicked off last Sunday at Sinopec's six filling stations in downtown Guangzhou, will go on indefinitely. The move comes as demand for gasoline and diesel intensifies during the summer months.

 

The promotion is associated with Sinopec's undercutting strategy to fortify market position in the wake of two oil price cuts in Beijing earlier this year.

 

Total-Sinochem Fuels, a joint venture between Total and Sinochem focusing on oil products retail, lowered the retail price for gasoline by about 8 percent when it opened two new stations in Beijing in March. China National Petroleum Corp (PetroChina) cut the price by up to 0.2 yuan shortly after.

 

"Our strategy is to encourage private car owners to fill their cars up on Sunday to avoid the long queues of vehicles waiting for the fill-up on weekdays," said Huang Hannan, department manager at Sinopec's Guangzhou branch. "It is possible that we will offer the same price incentive on Saturday if the strategy works," he added.

 

He denied the view that the strategy is an attempt to undercut prices in order to expand local market share.

 

"Filling stations of both Sinopec and PetroChina, the nation's key oil suppliers, have launched promotional campaigns in one way or another in the past few months," said Yao Daming, director of the oil products department of Guangdong Oil and Gas Association.

 

"Whether for the purpose of competition or not, the price cut is beneficial to the growing number of vehicle owners."

 

Yao said Sinopec's recent move means Guangzhou will not have to face oil supply shortages this year, despite the slight increase in the wholesale price the past month.

 

PetroChina's Guangzhou branch refused comment on the move yesterday.

 

Instead of a market-oriented oil pricing mechanism, the pricing system is still under government control.

 

(China Daily June 7, 2007)