Asian motorists enjoy cheaper petrol amid glut
Asian motorists enjoy cheaper petrol amid glut
SINGAPORE (Reuter): Motorists in Asia are benefiting from
falling petrol prices as oil companies fight for market share
amid falling international prices, industry sources said on
Monday.
And prices could have further to fall yet with international
prices expected to weaken.
"Excess Chinese and Korean barrels will return to the market
after August, when their demand eases and will weigh down the
market," said a gasoline trader. "I am bearish."
Over the past week, prices in South Korea, Singapore and the
Philippines have fallen. Sellers cited weaker international
prices and falling and wholesale prices in Singapore.
Retailers in the Philippines and most other countries in the
region look to Singapore -- Asia's bellwether refining center --
for their cue on prices.
Asian international gasoline prices have fallen to a 10-month
low, pressuring the wholesale, or ex-refinery price, and retail
prices.
Last week forecourt prices in Singapore fell for the first
time in almost four years.
The three grades sold in the city state were cut just one
Singapore cent per liter to S$1.15 to S$1.337 ($0.80-$0.93) for
unleaded 98-octane grade.
"But it is peanuts compared to the fall in spot and wholesale
prices," a gasoline trader with a major oil company said.
Since the last retail price change at the end of March,
international prices have fallen 22 percent and wholesale prices
18 percent.
"It has been quite some time since prices fell, but whenever
we can afford it, we will pass savings on to the consumer," one
retailer said.
The reluctance to lower prices has boosted Singapore's retail
prices to one of the highest in the region.
In comparison, other retailers in Asia's main deregulated
markets have waged war at the pumps instead.
South Korean refiners raised petrol prices just after price
deregulation on Jan. 1, but have been locked in a price war
since.
In the latest price cut last week, South Korea's largest
retailer Yukong Ltd slashed its petrol prices by 14 won per liter
to 809 won ($0.91), the lowest level offered by the country's
refiners.
Yukong was forced into combat at the beginning of June as
other refiners started to take its market share.
"Yukong's market share of around 38 percent has been reduced
by at least one percent since Ssangyong and Hyundai have reduced
their prices," an industry source told Reuters.
"Yukong will continue with this strategy to try to recover
market share," he said. "Most (of the other refiners) will
follow."
Some analysts said they expect the price war in Korea to
continue for another one or two years.
On the other hand, Japanese demand is flourishing and
competition is heating up as retailers try to lure holiday
drivers to the pumps for the peak summer season between July and
September.
In May, a big holiday month in Japan, demand rose five percent
year on year.
"I think gasoline demand will be higher this summer compared
to last year because pump prices are currently so cheap," said a
trader with a Japanese refiner.
The trader said pump prices are around 90 yen per liter
($0.80) compared to last summer's levels of 100 to 110 yen.