The price difference between PetroChina and Formosa Plastics' barreled gas has caused a major reshuffle in the market. (File photo)
[Reporter Lin Jinghua/Report from Taipei] Domestic barreled gas prices have been frozen for a long time. China National Petroleum Corporation has sold one barrel and lost one barrel. Formosa Plastics has refused to pay further compensation and maintains a price difference of 1.8 yuan per kilogram with PetroChina. The market shares of PetroChina and Formosa Plastics have been greatly reshuffled. The middle and lower reaches of the central Formosa Plastics system are suffering. It is unspeakable that the market is going crazy. Formosa Plastics wants to use price to reduce losses, while PetroChina is unwilling to put in the maximum amount. Moreover, the long-term price difference has caused some downstream companies to raise prices on the grounds that they are "unavailable." This has not achieved the effect of the government's policy of stabilizing prices.
Domestic barreled gas is in chaos. Because there are two leading companies, China National Petroleum Corporation and Formosa Plastics, Formosa Plastics cannot afford to continue to lose money on barreled gas. The price difference between Formosa and China National Petroleum Corporation is currently about 1.8 yuan per kilogram, causing a large amount of demand from sub-packaging houses and gas lines to shift to China National Petroleum Corporation. Lai Fangquan, chairman of the National Federation of Gas Associations, explained that the signing is a contract between the general distributor and Formosa Plastics and China National Petroleum Corporation. Generally, subpackaging plants and downstream gas shops are not all bound by the contract. Now the market can be said to be "all going their separate ways."
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He used the analogy of a gas station. Assuming that the price difference between Formosa Plastics and China National Petroleum Corporation was 1.8 yuan per liter, would consumers still want to refuel at Formosa Plastics? The same is true for barreled gas. The price difference is the key reason why China National Petroleum Corporation's market share has soared to more than 90%, while Formosa Plastics has plummeted to less than 10% of the market share.
Bottled gas goes upstream to the first level of downstream gas suppliers, the second level of dealers and the third level of packaging plants, and then to the final gas bank. Based on an estimate of a price difference of 1.8 yuan per kilogram, the sub-packaging company needs to transfer about 1,000 tons of goods every month, and the cost difference is 1.8 million yuan. The average monthly sales volume of a gas company is about 16 to 20 tons, and the price difference of 1.8 yuan per kilogram will increase the cost by about 30,000 to 36,000 yuan a month, which is not a small amount for a small gas company.
Lai Fangquan explained that the sub-assembly factory cannot pass all costs to the downstream. Even if the cost of Formosa Plastics is relatively high, they can only bite the bullet and buy it because the downstream gas companies are competing with each other. If the sub-assembly factory raises the price, all customers may go to the CNPC system, and the business will not be able to continue. He said that sub-packaging plants are caught in the middle. They have to face upstream supply and price issues, and also take into account the operation of downstream gas companies. The pressure is very high. Now it is mostly up to the sub-packaging plants to swallow the price difference and find ways to maintain the entire supply system.
Because Formosa Plastics and China National Petroleum Corporation have maintained a price difference for more than a year, the price difference of barreled gas has not risen to the national agenda. Mainly in the north and south, China National Petroleum Corporation is still the system. Lai Fangquan bluntly said that many companies in Changhua and Yunlin used to be Formosa Plastics system, but now they are affected by the price difference. In terms of operations, the central region is more affected. Lai Fangquan's sub-packaging factory is located in Changhua. He frankly said that he can only rely on favors and ask friends in the industry to help adjust goods and find ways to reduce costs.
According to the national average price of household barreled gas announced by the Energy Administration of the Ministry of Economic Affairs, since the Middle East war this year, the average price of 20 kilograms of gas has risen from 758 yuan in March to 767 yuan. Why have the upstream prices not been raised, but the downstream retail prices have continued to rise? He explained that some downstream operators in the market do use the inability to buy gas as an excuse, saying that Formosa Plastics has no goods and their own purchases are affected, so they must adjust prices. Therefore, even if the upstream price of China National Petroleum Corporation is not increased, insufficient supply and increased delivery costs may put midstream and downstream operators under pressure to increase prices, which will not achieve the effect of the government's freezing increase in barreled gas in the hope of stabilizing people's living prices.
He believes that the problem of barreled gas structure must be dealt with quickly. It should not only depend on whether the upstream price increases, but also whether the market can actually obtain enough gas. If the supply problem is not solved, the cost will still be passed on to the downstream.
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