China`s October ex-refinery jet fuel prices to fall $33/mt from September: Platts estimates
Source: www.chinamining.org Citation: Platts Date: September 26, 2014
The ex-refinery jet fuel prices at which China National Offshore Oil Corporation, PetroChina and Sinopec will supply to China National Aviation Fuel are expected to fall for a fourth straight month in October by about Yuan 205.79/mt ($33.46/mt) from September, according to Platts estimates.
The three suppliers` reference ex-refinery jet fuel ceiling prices for October are expected at Yuan 6,599.96/mt, excluding a premium of Yuan 30/mt, according to Platts calculations.
The premium is negotiated between CNAF and its three suppliers on an annual basis.
The estimated drop reflects a month-on-month fall of Yuan 205.79/mt in the post-tax price of imported jet fuel to an average of Yuan 6,629.96/mt from August 25-September 24 -- the National Development and Reform Commission`s review period for September -- according to Platts calculations.
Under the current pricing mechanism established in July 2011, the NDRC sets a cap on ex-refinery jet fuel prices on the first day of every month based on the post-tax import price -- which comprises the Platts monthly average FOB Singapore jet fuel price, freight from Singapore to China and insurance at $2/barrel, VAT of 17% and port dues totaling Yuan 50/mt.
The ex-refinery prices are not allowed to exceed the post-tax import costs of jet fuel shipped from Singapore.
NDRC`s review period for setting the subsequent month`s ex-refinery jet fuel prices is from the 25th day of the previous month to the 24th day of the current month, unless these dates fall on a weekend or public holiday.
According to Platts data, over August 25-September 24 the Mean of Platts Singapore jet fuel/kerosene price averaged $113.63/b, or $897.69/mt, down $3.55/b from the previous review period, reflecting a $4.64/b drop in the benchmark ICE Brent crude futures in the review period to average $99.83/b.
Adding to that, the surplus barrels of jet fuel/kerosene from China and the Middle East continued to outweigh steady demand for the grade, locking the weak price in the region.
Jet fuel/kerosene exports from China over January-August increased 10.8% year on year to 6.45 million mt, according to latest data from the General Administration of Customs.
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