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Exclusive: Gasoil can turn negative on oversupply, lacklustre demand – Refinitiv Oil Research Director

‘The primary reason for this is simply an oversupply of the product, especially in Asia, which is the largest exporter in the world, as a region; and insufficient demand to soak up the supplies,’ says Yaw Yan Chong.

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Yan Chong

The Unthinkable can happen – that gasoil can turn negative, predicts Yaw Yan Chong, Director of Oil Research, at financial markets and infrastructure data provider Refinitiv.

“The primary reason for this is simply an oversupply of the product, especially in Asia, which is the largest exporter in the world, as a region; and insufficient demand to soak up the supplies,” Yaw told Singapore bunkering publication Manifold Times in an exclusive interview.

“The supply-demand situation is worse than in April, when the impact of Covid-19 was the strongest in the oil market, when gasoline and jet fuel margins fell into the red and hit record-lows. In contrast, 10ppm-Dubai averaged at $6.90/bbl for the month then.”

Near-record low of gasoil margins for Asia and Europe

According to Yaw, gasoil margins (as represented by the crack spread between Singapore 10-ppm and Dubai for Asia, and London Gasoil (LGO) and Brent for Europe) have been at or near record lows since mid-September, with their respective front-month contracts at $2.80/bbl and $2.88/bbl.

Refinitiv data showed LGO-Brent M1 hitting an all-time low of $2.48/bbl on 16 September and 10ppm-Dubai its second-lowest level on record at $2.47/bbl on 17 September, versus the all-time low of $1.77/bbl in May this year.

LGO-Brent M1
LGO Brent M1

10ppm-Dubai M1
10ppm Dubai M1

Asia’s top four refiners – China, India, South Korea and Japan – sharply slashed refinery runs from March to April, hitting an all-time low of 80.45% of the 4 countries’ total capacity of about 27 million bpd. Since then, runs have been restored, hitting 84.81% in July, though still under the 5-year average of 86.52%.

Asia top 4 counteries refinery runs vs 5 year average

In comes China into the picture – with high storage volumes

Although the region’s overall refinery runs remained below average, China’s runs hit record-high levels of around 90% of its 15.6 million bpd capacity for the June-August period, amid record-high crude imports of over 11 million bpd for each month of May-September, noted Yaw.

China refinery runs

He explained the record-high crude imports has translated into rebounding output of refined products from China, especially for diesel, which hit a 23-month high of 15.1 million mt in July.

China gasoil output

Chinese exports of only 550,000 mt in the same month of July – a 5-year low, due to poor export margins – signalled large volumes were being stored in China.

In August, gasoil output from Chinese refineries eased to under the 5-year average at 14.2 million mt, while exports jumped to 1.8 million mt, steady versus the 2019 average.

“I expect China’s output to stay high going forward, particularly in view of their large crude inventories and the need to maximise their product export quotas of over 50 million mt for the year,” Yaw forecasts.

“Similarly, gasoil output at the other three major refining countries [India, South Korea and Japan] are also largely at 5-year average levels, with the total for all four centres at 30.1 million mt for July, close to the 5-year average of 30.4 million mt/month.”

Asia gasoil output

Negative gasoil prices occur

“The large output, amid still-poor domestic demand in each of the four countries, means that refiners are forced to export, with outflows from India and South Korea at steady versus 2019 levels, respectively averaging at 2.55 million mt/month and 2.27 million mt/month for the April-August period, amid poor overall global demand,” he explains.

“If output continues at current levels, and demand remains curbed, particularly in view of widespread second-wave infections all over the world, gasoil margins can fall further and the unthinkable – that gasoil margins can become negative – can actually happen.”

Impact on bunker markets

Low or negative gasoil cracks will also mean lower outright gasoil prices due to the product being a key blending component to make Very Low Sulphur Fuel Oil (VLSFO) and marine gas oil (MGO), according to Yaw.

“I see this as actually positive for end-users, such as shipowners, and even traders/barge operators because their costs will become lower,” he says.

“This is certainly a good thing in an environment where credit is tight and financing difficult, following the implosions of Hin Leong, ZenRock, Coastal Petroleum, IPP, among others.

“This is, of course, negative for refiners; given that gasoil is typically the largest component of their yield. They can still stave off the threat of negative gasoil margins if they cut runs again, as they had done in March/April.

“I don’t think China will cut runs for the reasons stated above, while runs at the other three countries are still well below average, with India at 82%, South Korea at 88% and Japan at 65%; meaning the capacity to be cut is limited.

“I don’t see the situation improving until Covid-19 eases, and that doesn’t look like it’s going to happen till 2021.”

 

Photo credit: Refinitiv
Published: 24 September, 2020

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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.

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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

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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.

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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

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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.

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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

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