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China reforms jet kerosene pricing toward market-oriented trend

https://www.chemnet.com   Jul 13,2011
The National Development and Reform Commission, China's energy watchdog, reforms jet kerosene pricing regime that will adjust price of domestic jet kerosene (national standard) monthly to dovetail with the international market trend, according to a statement released by the NDRC on Jul 12. The new pricing mechanism will take effect as from Aug 1, according to the statement.

This is a forward step for the country to gradually establish a market-oriented jet kerosene pricing regime, the commission said.

The jet kerosene ex-refinery price will be adjusted once a month, in the first day of each month, the statement said.

The ex-refinery price of domestic jet kerosene will be based on CFR import cost (after tax) for jet fuel imports plus a negotiated premium, the statement said.

The post-tax CFR import cost will adopt a monthly mean FOB price in Singapore market plus insurance fee, customs tax, value-added tax, port fee etc.

The pricing period of Singapore mean price is set from 25th in the previous month to 24th in current month; insurance fee is set at US$2/bbl, port fee Yuan 50/mt; and the exchange rate will use the average value of daily exchange rates in the pricing period.

In the preliminary stage, the post-tax CFR import cost of jet kerosene will be released by the NDRC, the statement said.

The premium will be set once a year via negotiation among the domestic dominant jet fuel supplier China National Aviation Fuel Corporation (CNAF) and three state-run oil majors: Sinopec, PetroChina and China National Offshore Oil Corporation.

The three oil majors are required to submit their negotiated premium for August-December 2011 to the NDRC by end July.

The price of jet kerosene supplied to the army will be temporarily set at the CFR import cost of jet kerosene.

The ex-refinery price of off-spec jet kerosene will be set by refineries themselves in the light of the product quality and the price of standard jet kerosene product.

Starting from 2007, CNAF adjusts prices of jet kerosene supplied to domestic airlines quarterly, with the crude and jet fuel prices in both international and domestic markets in the previous quarter as reference.

Separately, earlier, China just cut down the import tariff for jet kerosene from temporary 6% to zero as from Jul 1.
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