According to Kommersant, wholesale motor fuel prices in Russia started to grow last week, increasing 1% to RUB 31,140/t, for the first time in several weeks. This still has to be reflected in the retail price for diesel and gasoline, which are likely to increase by several kopeks per litre (around 0.1%).
We expect the retail price for motor fuel to continue growing moderately in 2H12 on the back of seasonal factors and supported by strong demand. According to our estimates, retail gasoline prices increased a mere 1.4% YoY in 1H12, pressured by the ‘freeze’ at the beginning of the year, but we see that accelerating in the second half of the year to average some 3.4% for 2012. Given that we do not expect prices to grow substantially, we believe that the motor fuel market in Russia will continue to be driven by demand and supply. This will be supportive for the entire sector, in our view.
Dmitry Loukashov, Ekaterina Rodina, Alexander Kirevnin, Elena Kopylova, Mikhail Zarkhi
VTB Capital analyst
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