Sinopec, which controls more than 570 stations in Shanghai, or around 70 percent of the market, will lower the price of its widely used 93-octane gasoline by 2.2 percent to 4.95 yuan (72 U.S. cents) at most stations. But at other stations - those located in more competitive areas of the city - the previous discount rate of 4.71 yuan a liter will remain.
PetroChina, meanwhile, won't make any immediate changes, as the company and Sinopec have engaged in a series of discounting after the state changed its price-setting mechanism in December.
The latest adjustment comes as the National Development and Reform Commission said on Wednesday that refinery-gate fuel prices would be trimmed for the second time in a month to reflect lower oil prices and boost economic growth.
The ex-factory price for gasoline was lowered by 140 yuan a ton, or 2.5 percent, while the price of diesel was cut by 160 yuan a ton, or 3.2 percent, effective on Thursday.
China launched the new fuel pricing mechanism late last year to better align domestic fuel prices with costs. The new system adopts a top price limit instead of a guidance price, and gives more competitive freedom to retailers.
"In accordance with the improved fuel pricing system, the state decided to lower refined oil product prices because of the sustained fall in international crude oil prices," said the NDRC, China's top planning agency.
Crude futures in New York have plunged 73 percent from their July record amid the global economic slowdown.
Slowing fuel demand in the market forced Sinopec and PetroChina to make voluntary price cuts across the country to compete for customers on top of the December 19 national-level cut, when gasoline and diesel prices were slashed by up to 18 percent.
