Shortage of diesel expected to continue in cities
By Cathy Ding |
November 8, 2010, Monday
|
Print Edition
Print Edition
MOST Chinese cities are set to experience a diesel shortage till the end of this year because demand is likely to be robust while production capacity is seen to remain low, analysts said.
They warned that rising international crude prices will likely exacerbate the diesel shortage in the coming months.
In Zhejiang Province's Wenzhou, which boasts China's most prosperous private economy, some enterprises will only have one day of electricity before facing a power supply reduction of between two and four days, Xinhua news agency reported yesterday.
This unusual situation was due to the local government's power restriction on the industrial sector in order to meet energy conservation and emission reductions commitments.
This, in turn, has led to some manufacturers having to purchase diesel in order to generate power so that their factories can continue to operate.
"The fourth quarter is the traditional peak period for diesel consumption as agricultural use of the fuel is very high and the power restriction will also push up diesel prices," Citic Securities' analyst Yin Xiaodong said. "It also coincides with maintenance work being done on production facilities by refiners."
Last week, Sinopec and China National Petroleum Corp said they will boost crude processing to ensure market supplies.
The National Development and Reform Commission, the country's top economic planner, on October 26 raised the gasoline price by 230 yuan (US$35) and that of diesel by 220 yuan a ton.
According to the new pricing mechanism introduced at the end of 2008, the NDRC revises fuel prices when crude prices change more than 4 percent over 22 working days.
They warned that rising international crude prices will likely exacerbate the diesel shortage in the coming months.
In Zhejiang Province's Wenzhou, which boasts China's most prosperous private economy, some enterprises will only have one day of electricity before facing a power supply reduction of between two and four days, Xinhua news agency reported yesterday.
This unusual situation was due to the local government's power restriction on the industrial sector in order to meet energy conservation and emission reductions commitments.
This, in turn, has led to some manufacturers having to purchase diesel in order to generate power so that their factories can continue to operate.
"The fourth quarter is the traditional peak period for diesel consumption as agricultural use of the fuel is very high and the power restriction will also push up diesel prices," Citic Securities' analyst Yin Xiaodong said. "It also coincides with maintenance work being done on production facilities by refiners."
Last week, Sinopec and China National Petroleum Corp said they will boost crude processing to ensure market supplies.
The National Development and Reform Commission, the country's top economic planner, on October 26 raised the gasoline price by 230 yuan (US$35) and that of diesel by 220 yuan a ton.
According to the new pricing mechanism introduced at the end of 2008, the NDRC revises fuel prices when crude prices change more than 4 percent over 22 working days.
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