The fall in fuel prices and illegal filling station. What is the connection?

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The fall in fuel prices and illegal filling station. What is the connection?

Active restoration of a network of illegal filling stations having an increasing impact on the market, in particular on the pricing of the discounters, who are forced to conduct an aggressive pricing policy and lower fuel prices amid falling sales. About this on his page in social network Facebook announced the Director of “Consulting group A-95” Sergey Kuiun.

According to him, after the introduction of quarantine measures, the market returned an illegal gas station, the sweep of which the government held in January 2020.

“Last January, the Cabinet cleared a good shadow, but as soon as the virus has loosened its grip, and the purchase price has dramatically fallen – all came back. Without this contingent of personnel, quarantine, cash registers and other nonsense today live very well. Them to the cashier – a gradual shallowing of the pockets of consumers who will look for cheaper fuel,” writes S. Kuiun.

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In his opinion, that the illegals have driven the decline in prices of the economy segment, which, in turn, can afford it.

“Two reasons: these networks (discounters) do not keep large stocks, work “from wheels”, ie, buy on the wholesale market, where prices are the first to respond to the external environment. For example, diesel fuel is already cheaper than 15 UAH/liter. So that the time margin allows you to go down, hoping to bite off a little competition of sales in terms of their widespread decline,” he said.

At the same time, according to experts, a major network can’t afford such a sharp decline in prices because of falling sales, which, at the end of a two week quarantine, amounted to 20-40%.

“As for the major players, they are forced to keep 20-3-4 a week’s supply of fuel, these elephants know how to dance, but not love. The leaders of the three major retailers with whom I have been in contact over the past two days, saying that their system still wasn’t tons of cheap April resources, continue to March. But the process is, and that means they want to or not, you have to crawl after discount,” – said S. Kuiun.

In his opinion, retail prices of gasoline and diesel fuel remain the potential to reduce another 2-3 hryvnia per liter, but the limiting factor remains falling sales and uncertainty with the hryvnia.

“About 2-3 UAH per liter (fuel) – a tangible reduction potential, which is underpinned by a stronger local currency. On the other hand, the expected fall will increase the unit cost of each liter. There is no clarity with the future of currency: how to interpret 16 000 edits in “andikalovsky” law? This is the end of the work with the IMF? Then what about the course? 30 for a dollar? 35? 40?.. Then it will be not to reduce fuel prices”, – says the expert.

In addition, according to S. Kuiun, the uncertainty adds to the market and the situation around the agreement the oil-producing countries to reduce output.

“The market expects a price rebound, but will he and what will see next week. World market reaction to news is almost no” – he said.

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As previously reported, retailers have begun to cut prices from 20 of March. During this period, prices fell to an average of 2 UAH/l. this week the decline in retail prices has slowed in large networks. In this network the trading network in the lower price segment (discount stores), has started to get aggressive and lowered the price of diesel fuel below 20 UAH/liter.

Earlier in the program “Makaronina” Adam Sikorski, President of UNIMOT (a network of AVIA filling stations in Ukraine and Poland) noted that on the Polish market in early April, a small company discount first went to a more aggressive lower prices, which ultimately has significantly lowered the average retail margin in the market. According to him, the increase marginale retail sales in the first phase allow network companies to minimize losses from the collapse of implementation, which, in particular, in Poland amounted to 20-30%.

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