China fuel gets cheaper as firms compete

THE two dominant oil firms in the city are playing catch-up in an escalating price war, with PetroChina again lowering fuel prices to make them cheaper than rival Sinopec.

Sinopec, cut prices on Thursday but enjoyed the advantage for just eight hours before PetroChina again lowered prices at its 150 or so local pump stations.

The widely used 93-octane gasoline has been cut by 0.1 yuan to 4.66 yuan (68 US cents) a liter. Prices for 90-octane and zero-grade diesel were reduced by the same margin.

This made PetroChina's 93-octane gas 0.05 yuan cheaper than what Sinopec was offering at its 44 selected stations.

Sinopec lowered prices at these stations after PetroChina first cut prices last week. The stations are mainly in suburban areas and all located near stations under PetroChina's wing.

Sinopec controls some 570 stations in Shanghai, or 70 percent of the city's total.

Sinopec said it had to cut prices to maintain sales volume, which had fallen 20 to 30 percent at some stations.

Some private-sector stations are offering even lower prices than PetroChina.

Drivers are not in a hurry. "I choose not to get my car tank filled now, as the recent frequent reductions mean prices could go lower any time soon," said Lu Chunchun, a local engineer.

China's new fuel-pricing rule is giving more flexibility in price cuts, potentially intensifying competition.

But analysts say the current wave of price cuts, also seen in other provinces, was more a result of slowing demand, high-level stocks, plus the plunge in crude oil costs.