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.