Global energy and commodity price reporting agency Argus Media on Monday (24 December) published a summary on the very low sulphur oil (VLSFO) export awarded by the Chinese government to support demand in the bunker market post IMO2020 :
China’s commerce ministry has awarded a 5mn t (32.25mn bl) export quota for very low-sulphur fuel oil (VLSFO) to five refiners for 2021, to help meet International Maritime Organisation (IMO) sulphur requirements.
The quotas have been awarded to state-controlled Sinopec with 2.4mn t, CNPC with 1.5mn t, CNOOC with 400,000t and Sinochem for 320,000t, as well as private-sector ZPC with 390,000t.
China awarded these refiners a total of 10mn t of VLSFO export quotas in 2020.
The government is expected to grant more VLSFO export quotas for 2021, as 5mn t is not enough to meet marine fuel demand. China allows VLSFO exports only to the bonded bunker sector, rather than for cargo trades, because it wants to ensure the fuel goes to the bunker market to meet the IMO 2020 requirement, which caps the sulphur content of marine fuel at 0.5pc.
China’s bonded bunker sales were about 16mn t in January-November 2020, up from about 12mnt in the same period in 2019.
China’s main refineries say they have more than 18mn t/yr of VLSFO production capacity, although official data do not break down production of VLSFO and high-sulphur fuel oil (HSFO). China produced 27.6mn t of fuel oil in January-October, up by 41pc or 8.5mn t from 19.1mn t over the same period in 2019.
Photo credit and source: Argus Media
Published: 29 December, 2020
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