At December 31, 2011 the Company had increased its combined balance of inventory on-hand and advances to suppliers by USD $24.2 million or 22.2% to $133.5 million since its fiscal year-end on June 30, 2011. Based on its inventory on-hand product mix of 58,738 metric tons (approximately 19.4 million gallons) of petroleum, the Company's retail inventory value at December 31, 2011 would have increased by approximately USD $5.6 million considering the recent price increase. Longwei also had USD $74.6 million in advances to suppliers at December 31, 2011, which allows the Company to lock in supply and pricing with refineries so that it can react quickly for purchases based on the timing of international crude oil price fluctuations and the PRC retail pricing adjustments."We will continue to operate within our business model, which we believe gives us a competitive advantage. By utilizing our large storage capacity and advances to suppliers, we are able to adjust inventory levels based on the anticipated movement of industry pricing, which acts as a hedge on pricing levels," stated Michael Toups, CFO of Longwei. "Utilizing our excess storage capacity allows us flexibility to take advantage of pricing, supply and demand fluctuations within the marketplace."
Longwei Petroleum To Benefit From PRC Fuel Price Increase
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