According to Reuters, China's state-owned oil giant sinopec and petrochina is retail price, and the gas price dynamics of an unprecedented, an attempt to regain from local private enterprises and foreign-invested enterprises refined oil retail market share.
The rare price war started in late march when sinopec reported a three-year low in retail sales for the first quarter. As the market oversupplied, sinopec began slashing prices to respond to the frequent sales of private gas stations.
Three state-owned company sources involved in the sales promotion said that China's oil quickly followed up, exacerbating the price war against private companies, as well as foreign companies such as shell and BPBP.
The sharp drop in prices has spread from the most oversupplied northern provinces of China, squeezing margins in the oil and oil retail market.
The war has benefited Chinese drivers.
In the dusty northern coal town of luliang, a recent weekend taxi and truck driver had a front row at sinopec's gas station. Sinopec cut petrol prices by rmb1.40 ($0.21) per litre, or nearly a quarter.
"We all know sinopec has a better gas quality, but it's too expensive, so I went to private gas stations to fill it up," a driver surnamed zhang told Reuters. "Now I change sinopec, so long as sinopec always has such a discount I always come."
Petrochina and local private gas stations, near tai also give the same discount, and also perform various means that with the price in succession, such as eye-catching red banners, free car wash, prepaid refueling card points, etc.
Lu dapeng, a spokesman for sinopec, said the price cuts were the most common form of market competition. He did not elaborate.
Such low prices are rare for both sinopec and petrochina.
At the end of march, the discounts for the two companies' high-grade diesel engines were only 0.20 to 0.40 yuan per liter.
"Sinopec has made a targeted strike to recover the loss of sales as the independent refinery has raised the discount to unaffordable levels," said a marketing executive at a state-owned oil company.
Price wars are rare before 2013 because strict government price controls lead to limited profit margins. In 2010, when shortages hit, petrol stations were rationed.
But since 2014, the global slump in oil prices, and the so-called "tea" (teapot) refinery independent refiners sudden rise, to inject cheaper oil 90000 gas stations in China, the market shift.
Teapot refiners for lack of retail infrastructure, and banned exports, mainly oil sold to more than 40000 domestic private gas stations, which many of them run by family or independent fuel distributor.
"The teapot plant has brought a huge amount of excess, which has loosened 80 per cent of the market share that the two big oil majors have been occupying for years," said KefengYan, senior oil research specialist at IHSMarkit.
According to former shell China retail, head of oil product retail electronic platform to Beijing network technology co., LTD. (Autogo) founder in the chang, sinopec and petrochina currently controls roughly two-thirds of retail sales, independent control about a quarter of the refinery.
Global giants such as BP, shell, total TOTF. PA and exxonmobil xom.n have joined the fray. At present, foreign capital holds and operates nearly 4,000 gas stations, accounting for about 8% of the gasoline retail market, mainly through the establishment of joint ventures with sinopec and petrochina.
"The oil retail market has been volatile and affected by seasonal demand and supply changes," shell said in an email. Shell is committed to rapidly increasing its retail network in China, with a total of 1, 200 gas stations.
Margins are squeezed
Despite the profit margins are squeezed, sinopec and petrochina's the point of retail business from loss, the main benefit from them in the main consumer market dominance in southern and eastern China, the region for oil discount it's not a big demand, and more affluent drivers also less sensitive to price.
Compared with the price of rmb5.24 per liter for luliang, the price of unleaded petrol in Beijing and the price of gasoline in Europe 5 are about 6.66 yuan per litre. The price of gasoline in Beijing is about 12 percent higher than that of California's premium gasoline, but about half the price of Singapore.
From competitors, the sources said sinopec will likely be the lead, the hope in the billions of dollars of initial public offering (IPO), contain oil the momentum that the retail, and strengthen the retail business.
Despite the crackdown, sinopec's 30,000 gas stations and more than 23,000 convenience stores are considered profitable, with analysts valuing the company at $58 billion.