Sinopec Rises Most in 6 Months on Price Speculation

By Wang Ying and Winnie Zhu

Nov. 19 (Bloomberg) -- China Petroleum & Chemical Corp., Asia's biggest oil refiner, rose the most in six months in Shanghai after a state researcher's comment on fuel taxes prompted speculation China will speed up changes to energy pricing.

Sinopec, as China Petroleum is known, jumped by the 10 percent daily trading limit, the biggest increase since May 21, to 8.37 yuan. The shares traded at 8.25 yuan as of 1:22 p.m. Its Hong Kong stock advanced as much as 6 percent to HK$4.55, the biggest gain in five days.

China, the world's second-largest energy user, will introduce a retail fuel tax ``soon,'' Han Wenke, the head of energy research at the National Development and Reform Commission, said yesterday. This is a good time to push for fuel-price reforms as local oil supplies have improved, Mu Hong, vice director of the commission, said last week.

``The government's fuel tax comment sends a signal that fuel pricing reform will be accelerated, allowing room for bigger margins for oil refiners,'' Yin Xiaodong, an oil analyst with Citic Securities Co., said by phone in Beijing today.

PetroChina Co., the nation's second-biggest refiner, rose as much as 4 percent in Hong Kong trading to HK$5.83 and its Shanghai shares jumped 6.5 percent to 11.8 yuan.

Price Controls

``If the government levies the new fuel tax, I believe it will keep it relatively low at the initial stage to avoid a negative impact on consumption,'' Zhang Guojun, an oil analyst with Pingan Securities Co., said in the southern city of Shenzhen.

China controls fuel prices to limit their impact on inflation, curbing state refiners' ability to pass on rising crude costs to customers. Benchmark crude prices in New York reached a record in July. The Chinese government raised fuel prices by as much as 25 percent in June. Sinopec has said the increase wasn't sufficient to offset higher raw material costs.

The government has repeatedly said it plans to set up a mechanism to adjust domestic fuel prices in line with global levels to reflect production cost.

To contact the reporter on this story: Wang Ying in Beijing at ywang30@bloomberg.net. Winnie Zhu in Singapore at wzhu4@bloomberg.net