Economic Observer Online
June 7, 2012
By Jiao Xinrui (巢新蕊)
Translated by Tang Xiangyang
Original article: [Chinese]

As the price of international crude oil has decreased by more than 8 percent over the past month, it's likely that the NDRC will announce a cut in the price of diesel and petrol effective tomorrow.

According to the current fuel pricing mechanism, which was introduced in December 2008, the NDRC will consider adjusting prices if the 22-day moving average of three international crude grades changes by more than 4 percent.

The three international crude prices monitored by the NDRC are Indonesia’s Cinta, Brent and Dubai.

Recent reports suggest that the government will soon make changes to the existing fuel pricing mechanism.

Analysts predict that the maximum price at which gasoline can be sold to motorists could be reduced by between 600 and 700 yuan per ton, which if true, will be largest one-off price drop since 2009.

ILGAS, a website based in Shanghai that monitors the petrochemical industry, has estimated that crude oil prices have fallen by more than $11 per barrel
over the past month. A ton is equivalent to 7.33 barrels. Under the current pricing mechanism, this means that diesel prices could be reduced by between 700 and 750 yuan per ton.

Fuel and diesel prices were last reduced by 330 yuan and 310 yuan per ton respectively on May 10 this year after being raised by 6 and 7 per cent respectively in mid-March.