China raised ex-refinery prices for aviation fuel by RMB460 ($67.40) a tonne on Tuesday following rising global markets. There is now speculation about a rise in gasoline and diesel prices.
The roughly 10% increase will help lift refining margins of state refiner Sinopec and PetroChina, but will raise costs for airlines.
Reuters reported that a source at the China National Aviation Fuel Holding (CNAF), the country’s dominant aviation fuel distributor had said:
‘Jet fuel supply has been very tight recently as its price was lower than that of diesel..
‘The rise will give refiners more incentive to increase jet fuel production and ease pressure on jet fuel supply.’
Analysts said the price rise on jet fuel, which makes up only 4% of China’s total fuel consumption, could be Beijing testing the market before moving on to gasoline and diesel.