Sinopec's refining margin pressed by pricing policy

China’s fuel pricing system, which depressed Sinopec’s oil refining margin, should be revamped to more closely track price changes in international crude oil, a Sinopec official who heads a refining unit said. Yu Xizhi, president of Sinopec’s Anqing refinery, proposed that the period to consider fuel pricing should be shortened to 10 days from 30 days and to move to a fully liberalized market system. Under China’s fuel pricing regime introduced from the beginning of 2009, Beijing might adjust retail fuel prices if a 22 working day moving average of global crude prices rises or falls more than 4%. It gives refiners a fixed profit margin if international crude stays below US$80 and cuts the margin if crude price tops the level. Sinopec’s refining business swung to a profit in 2009 from record losses in 2008 with the help of the policy and a slump in international oil prices last year from their triple-digit record highs in the previous year. (March 7, 2010)