Longwei Petroleum to benefit from China’s fuel price increases

Longwei Petroleum Investment Holding Ltd., a company that provides storage for and distributes finished petroleum products, expects to benefit from the recent increases in the prices of gasoline and diesel fuel which were enacted by China’s National Development and Reform Commission, or NDRC. For the second time this year, the NDRC raised the prices of gasoline and diesel fuel. Gasoline prices rose by 6.5% while the price of diesel fuel increased by 7%, due mainly to increases in world crude prices. The increase of approximately US$95 per metric ton was based on a pricing mechanism that allows the NDRC to adjust fuel prices when the cost of crude oil increases by more than 4% over a period of 22 working days. “We have been using our working capital primarily to increase inventory and product availability based on anticipated price increases,” said Cai Yongjun, chairman and CEO of Longwei. “We have been balancing our working capital to take advantage of pricing opportunities to improve margins, as well as balancing the funding required to complete our acquisition of the Huajie Petroleum assets.” (April 6, 2012)