Connect with us

Business

Argus Media: INE contract targets IMO 2020 bunker fuel market

Futures contract part of efforts by Zhoushan to create an international bunkering hub rivaling Singapore.

Admin

Published

on

5d37e74ce34cd 1563944780

Global energy and commodity price reporting agency Argus Media on Tuesday (23 July) provided a bunker industry update informing readers the Shanghai International Energy Exchange (INE), a subsidiary of SHFE, is working on developing its own 0.5%S marine fuel futures contract:

China aims to list a new 0.5pc sulphur marine fuels futures contract by the end of this year.

The Shanghai Futures Exchange (SHFE) hopes the contract will give producers and trading firms a means to hedge their exposure to the new physical market emerging for 0.5pc sulphur bunker fuel. The SHFE's INE subsidiary expects to complete listing preparation work for the contract by the end of this year in order to get approval from national securities regulator the CSRC and to launch in early 2020.

The contract will work around the physical settlement of positions in bonded storage tanks where tax is only paid when the fuel is removed, like China's INE crude futures contract.

The INE aims to match its marine fuels contract to the incoming 0.5pc sulphur bunker fuel required by International Maritime Organisation (IMO) rules from 1 January 2020. It will be open to international investors but denominated in yuan, introducing an element of foreign exchange risk for offshore participants.

There is already a bunker fuel futures contract listed on the SHFE. The SHFE changed the delivery basis to bonded from domestic delivery last year, to boost its relevance to international bunker trade, and succeeded in boosting liquidity from close to zero to more than 800,000 lots of daily trade and 200,000 lots (2mn t) of open interest.

The SHFE allows delivery of both 3.5pc sulphur and 0.5pc sulphur bunker fuel into the existing contract. Either may be delivered to settle open positions, but only 3.5pc sulphur fuel is used because it is less valuable than the 0.5pc sulphur fuel grade. The latter commands a $138.98/t premium to the former at Zhoushan in Zhejiang province this month, Argus physical assessments show, down from a premium of $173.61/t in June.

The SHFE considered incorporating a premium for 0.5pc sulphur marine fuels into its futures contract, to attract liquidity. But it appears to have ditched that plan in favour of creating a new contract from scratch, perhaps to avoid the challenge of creating a dynamic market differential for each grade. Creating a new contract entails a far lengthier approvals process.

The futures contract proposal is part of a drive by the Zhoushan city government to create an international bunkering hub to rival Singapore. Bunker fuel trade at Zhoushan has grown rapidly, to 3.593mn t (60,000 b/d) last year from just 910,000t in 2016. But, Chinese bunker fuel traders still use Singapore swaps for their hedging purchases. Using a Chinese futures contract in China — even if physically settled — should better capture local market fundamentals, provide a regional arbitrage tool and be easier to access than Singapore swaps markets.

The Chinese bunker market is in its infancy and is dominated by a handful of state-owned firms. Only a dozen companies have bunkering licences at Zhoushan, where state-controlled PetroChina's bunkering arm, Chimbusco, is by far the largest trader. Refuelling at Zhoushan is far costlier than using Singapore because the government collects nearly Yn2,000/t ($44/bl) in fuel oil consumption and value-added taxes that it currently does not refund — even on bunker sales into the export market.

In contrast, the government does rebate taxes paid on gasoline, diesel and jet exported under quotas issued by the commerce ministry. This is about to change. A lobbying campaign by state-owned oil firms and the Zhejiang government is likely to persuade Beijing to announce rebates for bunker exports by the end of this year.

Source: Argus Media
Published: 24 July, 2019

 

Continue Reading

Alternative Fuels

Yang Ming orders six LNG dual-fuel, ammonia-ready containerships from Hanwha Ocean

Each of the six new vessels will have a capacity of up to 13,650 TEU and feature LNG dual-fuel propulsion and Ammonia Fuel Ready specifications.

Admin

Published

on

By

Yang Ming orders six LNG dual-fuel, ammonia-ready containerships from Hanwha Ocean

Taiwanese shipping firm Yang Ming Marine Transport Corporation (Yang Ming) and South Korean shipbuilder Hanwha Ocean on Wednesday (2 September) signed a shipbuilding contract for six 13,000 TEU class LNG dual-fuel container vessels. 

The contract was signed by Dr. Chuck Tsai, Chairman of Yang Ming, and Mr. Charles Kim, CEO of Hanwha Ocean. The vessels are scheduled for delivery between 2028 and 2029. 

They will complement Yang Ming’s existing fleet of 10,000+ TEU vessels and serve as key vessels on East-West services, with deployment flexibility across trade lanes connecting Asia with the East and West Coasts of North America, South America, and the Mediterranean. 

Each of the six new vessels will have a capacity of up to 13,650 TEU and feature LNG dual-fuel propulsion and Ammonia Fuel Ready specifications.

“As Yang Ming transitions toward net-zero emissions, LNG provides a relatively mature and economically viable alternative fuel solution, capable of reducing greenhouse gas emissions by approximately 20%,” the company said. 

“At the same time, ammonia can serve as a carbon-free fuel by utilising converted LNG storage facilities, while offering relatively lower conversion costs and comparatively well-developed supply chains and infrastructure. The Ammonia Fuel Ready design will therefore provide Yang Ming with greater flexibility in responding to increasingly stringent international regulations on greenhouse gas emissions.”

In addition, the vessels will be equipped with Type B LNG fuel tanks with a design pressure of 1.0 bar to enhance the safety and efficiency of LNG operations, together with a range of energy-saving technologies, including Wind Shields, Rudder Bulbs, Pre-Swirl Stators, and Shore Power Systems. Smart ship technologies and cybersecurity protection features will also be incorporated to enhance operational efficiency, safety, and reliability while effectively reducing fuel consumption and greenhouse gas emissions.

Deliveries under Yang Ming’s next-generation fleet optimization plan commenced earlier this year. By 2030, a total of 24 new vessels are expected to enter service. 

This includes 18 LNG dual-fuel vessels—comprising five 15,500 TEU, seven 16,000 TEU, and the six 13,000 TEU vessels under this contract—alongside six 8,000 TEU methanol dual-fuel-ready ships. 

 

Photo credit: Yang Ming Marine Transport
Published: 4 September, 2026

Continue Reading

Alternative Fuels

LR, China’s MARIC unveil tanker concept ready for three future bunker fuels

Both secured AiP for a new 114,000 DWT product and crude oil tanker designed to accommodate future conversion to LNG, methanol or ammonia.

Admin

Published

on

By

LR, China’s MARIC unveil tanker concept ready for three future bunker fuels

Lloyd’s Register (LR) and the Marine Design and Research Institute of China (MARIC) on Thursday (3 September) have secured Approval in Principle (AiP) for a new 114,000 DWT product and crude oil tanker designed to accommodate future conversion to LNG, methanol or ammonia.

Announced at SMM 2026, the concept addresses one of the biggest investment challenges facing shipping today: the need to develop vessels and capabilities that can support a range of alternative fuel options and pathways as technologies, infrastructure and regulations evolve.

While LNG is already a mature fuel pathway, methanol and ammonia remain at an earlier stage of development, with questions around global fuel availability, infrastructure development, economics and long-term adoption.

The 114,000 DWT tanker concept has been designed as a product and crude oil carrier that can accommodate future conversion to LNG, methanol or ammonia as technologies, regulations and fuel supply chains mature. By incorporating conversion readiness at the design stage, the concept aims to reduce future retrofit complexity and provide owners with greater confidence when planning long-term fleet investments.

The design concept was reviewed against LR’s July 2026 class rules and regulations, including requirements relating to ships using gases and other low-flashpoint fuels, alongside relevant IACS Common Structural Rules for oil tankers. Final classification and statutory approval remain subject to full compliance with all applicable rules and regulations.

Theo Kourmpelis, Global Business Director for Tankers, Lloyd’s Register, said: “Shipowners are being asked to make major investment decisions today despite continued uncertainty around which fuels will dominate in the decades ahead. Alternative fuel solutions each offer potential pathways to compliance, but fuel infrastructure, regulation and economics continue to evolve at different speeds around the world.

“Designs that preserve flexibility will be critical in helping owners manage risk while preparing for multiple future scenarios.”

Si Nan, Marine & Offshore Marketing Department Vice Director, MARIC, said: “As the industry explores different decarbonisation pathways, shipowners need vessel designs that can adapt alongside technological and regulatory developments. This concept was developed specifically to provide greater fuel flexibility and long-term resilience, allowing owners to respond to changing market requirements without being locked into a single fuel strategy.

“Receiving Approval in Principle from Lloyd’s Register is an important milestone that validates the design concept and supports its future development.”

 

Photo credit: Lloyd’s Register
Published: 4 September, 2026

Continue Reading

Alternative Fuels

DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024

LNG-fuelled vessels accounted for the vast majority of August activity while the strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year.

Admin

Published

on

By

DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024

Latest data from classification society DNV’s Alternative Fuels Insight (AFI) platform alternative-fuelled vessel ordering was strong in August, with 52 new vessels added to the platform.

This is the highest monthly total since October 2024 and follows another active month in July, when 47 vessels were added to the database.

LNG-fuelled vessels accounted for the vast majority of August activity, with 46 orders recorded. The container segment led the way with 30 orders, while the car carrier segment contributed a further 12 LNG-fuelled vessels. In addition, four ethanol-fuelled bulk carriers and two hydrogen-powered bulk carriers were added during the month, as well as one LNG bunker vessel.

The strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year. In total, 242 alternative-fuelled vessel orders have been placed in the first eight months of 2026, representing a 27% increase compared with the same period in 2025.

LNG remains the dominant fuel choice, accounting for 63% of all alternative-fuelled vessel orders registered so far this year. Container vessels represent the largest share of these LNG orders (59%), followed by car carriers (30%).

Jason Stefanatos, Global Decarbonization Director at DNV Maritime, said: “The past two months have been particularly strong for alternative-fuelled vessel ordering, with August recording the highest monthly total we’ve seen since October 2024. This has helped lift year-to-date orders to a level well above the same period last year.

“LNG remains the leading fuel choice, driven largely by activity in the container and car carrier segments. These sectors have been among the earliest adopters of alternative fuels, supported by predictable liner operations and increasing demand from cargo owners to reduce emissions across supply chains. 

“For many owners, LNG offers a combination of emissions reductions, fuel availability and future flexibility while the longer-term fuel landscape continues to evolve. 

“At the same time, the latest figures include orders for ethanol- and hydrogen-fuelled vessels, highlighting that owners continue to explore a range of decarbonization pathways. Different segments are making different fuel choices, but the overall level of activity demonstrates continued investment in lower-emission shipping.”

Screenshot 2026 09 04 at 12.29.26 PM Screenshot 2026 09 04 at 12.29.36 PM

 

Photo credit: DNV
Published: 4 September, 2026

Continue Reading
Advertisement

OUR INDUSTRY PARTNERS



Trending