Global energy and commodity price reporting agency Argus Media on Tuesday (26 January) published a summary on the various market forces that account for the 31% bunker fuel sales increase in China throughout 2020:
China’s bonded bunker sales increased on the year by 4.04 mnt, or nearly 31%, to 17.2mnt in 2020, according to data from bunker suppliers. A rise in Chinese production of very low-sulphur fuel oil (VLSFO) and the country’s quick recovery from the Covid-19 pandemic helped sales.
China’s fuel oil production rose by 37% from 2019 to 33.7mn t last year, national bureau of statistics (NBS) data show, with most of the volumes likely supplied to the bunker market in the form of VLSFO to meet the International Maritime Organisation’s 0.5% sulphur cap in marine fuels that took effect last January.
Around 30 Chinese refineries can now produce VLSFO, according to a survey by Argus. China has also reduced its dependence on fuel oil imports, which fell by 15% from 14.8mn t in 2019 to 12.6mn t last year, according to customs data.
On the demand side, China’s quick economic recovery from the Covid-19 pandemic helped drive an increase in vessels calling at Chinese ports, supporting bunker sales growth. China’s economy grew by 2.3% in 2020, the slowest since 1976 but above most analyst expectations.
China’s iron ore imports hit a record high in 2020, climbing by 9.5% on the year to 1.17bn t thanks to a rise in steel mill output. Container ships calling at Chinese ports also rose, with container turnover of 26,430 twenty-foot equivalent units (TEU) in 2020, up by 1.2% from 2019, according to the transport ministry. Despite imposing coal import restrictions at the end of 2019, China’s total coal imports still increased by 1.5% from 2019 to 304mn t last year, according to customs data. China’s agricultural product imports also moved up in 2020, with grain and meat imports rising by 28% and 60.4%, respectively.
China’s competitiveness in terms of VLSFO prices increased in 2020, which also helped boost its bunker sales volumes. VLSFO prices at China’s largest bunker port of Zhoushan recorded a premium of just $4/t to Singapore levels over June-December, compared with $25/t during the same period in 2019. Zhoushan port completed 4.73mn t of bunker sales in 2020, accounting for about 28% of China’s total volume. Lower VLSFO prices in Zhoushan compared with Singapore spurred more vessels to bunker at the Chinese port.
Photo credit and source: Argus Media
Published: 27 January, 2021
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