In face of persistently tight supply of gasoil, Sinopec continued to subsidize oil product sales branches outsourcing gasoil in April, according to a company source.
"The headquarters still encouraged gasoil outsourcing by giving Yuan 200/mt of subsidy in April, taking into consideration potential power rationing on supply shortage of power coal during the second quarter, which is the peak season for power demand," said the source.
Because of supply tightness, gasoil wholesale prices again surged above retail ceilings in some areas about one week after the government hiked retail ceilings on Apr 7, C1 reported earlier.
In the Yangtze River Delta, Sinopec pegged outsourcing prices of zero pour point gasoil at Yuan 8,450-8,500/mt currently, higher than wholesale ceilings, versus market level of Yuan 8,420-8,450/mt.
Despite attractive outsourcing prices, it is still not easy to purchase sufficient gasoil, because most market players were reluctant to sell with bullish expectations on the near-term market, market sources denoted. In addition, independent refineries have been reducing operation rates to avoid refining losses caused by high crude costs, said the sources.
Sinopec canceled subsidy for gasoline outsourcing in April, the company source also revealed.
Sinopec gave Yuan 400/mt of subsidy for outsourcing of both gasoil and gasoline in the first quarter as lofty global crude prices dampened production interest of underlying refineries.
