Wednesday , July 28 2021

Shell has dropped 2.7% of naphtha since tomorrow and the Government believes that equilibrium prices have been reached

Source: Archive

When Axion lowered the value of its diesel fuel over the weekend, the news was celebrated in the ruling coalition. On Monday, after 14 increases during the year, YPF ratified its report on third quarter results for its shareholders who have reached an equilibrium of imports or equilibrium prices. Today, in the Government confirms that, after the international decline in oil values ​​and dollars (in the past month), prices at service station pumps should not experience further increases and Raizen Argentina (Shell operator) announced a decline of 2.7%, on average , from 0 in the morning.

"With the decline in oil and the decline in the dollar already stable, they don't have to rise," they said.
NATION at the Energy Secretariat, led by Javier Iguacel. Beyond the reality of data, the views are interested in a context where the Government struggles to slow inflation. "The price of fuel is a free market, they can set the price they want," they clarified from the ruling party to rule out interference.

However, on the market – and despite the decline in consumption in recent months – they do not consider it so clear that the price of parity is finally achieved, at least for all products. Some believe some further improvement is needed, especially taking into account not only the race against the dollar but the fuel tax that is renewed on a quarterly basis, the increase in Government-determined biofuels and taxes on CO2 emissions, among other things the Argentinian economy has.

Among oil companies that say they are present in business
downstream they even dare to talk about some "pressure" from the government to the YPF to limit the price increase at the end of the year, something they dispose of both in the state oil company and in the Treasury Palace. Despite the company's global income in the third quarter, in business
downstream lost $ 908 million, according to the balance presented last Monday.

YPF is a reference for the market (having more than half of the state service stations) and in the latest price update decided to increase its fuel by an average of 2%, below its two competitors Axion and Raizen Argentina (operators of the Shell brand), which increased by 4 , 5% for naphtha and 7% for diesel fuel. With this increase, at YPF they ratified after reaching import parity prices. In YPF, super naphtha is sold at a value of $ 37.59; Infinia, at $ 44.22; while diesel is $ 33.76 and Infinia gasoline sells for $ 39.87,

Axion, meanwhile, decided to reduce, in the Buenos Aires region, 90 cents a liter of diesel premium: from $ 42.07 to $ 41.17 (-2.14%) and for general diesel, 31 cents: from $ 35, 29 to $ 34, 98 out of 0 last Saturday. "The fall in gas oil is purely due to commercial strategies," Axion said.
NATION, implying that it is not because decisions are made based on the cost structure but for the competitor's decision.

"With crude oil at US $ 65 and an exchange rate of $ 36, we have all our products in the balance sheet minus the diesel formula," said Raizen Argentina.

In the case of Shell, VPower naphtha will not change its value and will remain at $ 45.75. The rest will show a decline. Super will go to $ 38.99, VPower diesel, to $ 41.25 and diesel formulas, to $ 35.68.

The price of fuel is a variable that is followed by the Government. Beyond the signal of price freedom to increase investment, after the devaluation and increase in crude oil, it becomes one of the variables (along with the dollar and regulated prices) to explain the expected inflation in 2018 above 45%

In his presentation to investors last Monday, YPF executives said that Brent crude rose from US $ 84.90 per barrel on October 1 to US $ 69.79 a day before yesterday, plunging 17%. Dollars, in both. it went from $ 39.60 to $ 36.97. "It is clear that since April we are under import parity, even though there are important adjustments every month, we cannot catch up," said Vice President of Strategy and Business Development, Sergio Giorgi. The executive explained that in the last quarter the product reached most of the fuel, except for ordinary diesel fuel. "We will continue to monitor market and business conditions before making the necessary adjustments," he said and closed saying that a permanent increase resulted in weaker demand, which was "negative for business."

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