Sinopec's Shanghai Petrochem expects fuel hike soon

BEIJING, March 9 (Reuters) - Beijing should raise refined fuel rates by as much as 10 percent to compensate for gains in crude oil since prices were last hiked four months ago, Shanghai Petrochemical Corp's chief said on Tuesday.
Rong Guangdao, president of Shanghai PetroChemical, a unit of Sinopec Corp , said the refiner's operations would be affected if fuel prices are not hiked by March or April.
"Domestic fuel prices should rise 700 yuan per tonne to ensure a normal profit margin," Rong told reporters on the sidelines of China's annual parliament meeting.
"The government had adjusted fuel prices more closely in line with the pricing policy when oil price was below $70 a barrel, but has acted more loosely above that level."
China last raised retail gasoline and diesel prices on November 10 by 480 yuan per tonne, or around 7 percent, to the highest levels ever, when benchmark U.S. crude CLc1 was $78.4 a barrel. Crude prices traded near $81.43 on Tuesday. [ID:nSP473042]
Benchmark gasoline now costs 7,900 yuan a tonne while diesel is at 7,160 yuan a tonne
Shanghai Petrochemical, mainly a producer of petrochemicals but also a refiner, saw its chemicals business performing strongly with prices of ethylene -- key building blocks for plastics, rubber and synthetic fibre -- doubling from last year's level, Rong said.
"Judging from the situation at the beginning of of this year, our profitability was much better than last year, but full year results depend on crude prices, fuel pricing policy and developments in the chemical market."
Shanghai plans to process 214,000 barrels per day of crude this year, 22 percent higher than the 175,200 bpd in 2009, according to Rong.
The firm has two crude oil units with nameplate capacity of 120,000 bpd and 160,000 bpd respectively, but total operational capacity would be restricted to 240,000 bpd on insufficient complimentary facilities.
Rong said more than 95 percent of the oil Shanghai processed is imported.
Shanghai has completed the expansion of a new 600,000 tonnes-per-year paraxylene unit last year, lifting its paraxylene capacity to 830,000 tpy.
But a planned 600,000-tpy ethylene project, approved by the National Development and Reform Commission in 2008, was further delayed, according to Rong.
Shanghai has two ethylene crackers with stated capacity of 850,000-tpy although actual production could reach 950,000-tpy.