SHANGHAI, Jan 13: Diesel oil shortages have re-emerged in China’s Guangdong province with Sinopec beginning to ship diesel to alleviate shortages in the southern manufacturing hub, state press reported on Friday.

The official Xinhua news agency said Asia’s largest oil refiner had already shipped 65,000 tons of a total of 200,000 tons to ease shortages that had resulted in long queues at filling stations.

The provincial capital, Guangzhou, and Foshan city were particularly badly hit and the report quoted a gas attendant from a station near Guangzhou as saying diesel supply has run out nearly one month ago.

It was not clear why shortages had returned to the province after severe shortfalls in July and August were alleviated with emergency supplies, although Xinhua said increased shipping activity ahead of the Chinese New Year holiday was to blame.

Recent foul weather and strong ocean currents had also played a part, the report said.

In July and August, however, as international prices soared to record levels, refiners revolted against the government pricing caps and refused to take on new supply.

China has said it is working towards changing its current pricing system but no solution to date has been put forth. The system exists because Beijing wants to hold down inflation.

To do that it fixes retail oil prices by using a basket of the previous month’s global trading levels in London, New York and Singapore, and then allows only modest movement.

But the caps have caused huge losses to China’s domestic refining companies, who buy on international markets and then have to sell at below cost.—AFP