Global energy and commodity price reporting agency Argus Media on Tuesday (5 May) published an analysis on the impact of China’s recently implemented 0.5% LSFO bunker export quotas, with a focus on the import market:
The move by China’s commerce ministry to issue its first batch of 0.5% low-sulphur fuel oil (LSFO) bunker export quotas could lower imports of LSFO into the country.
Exports of residual bunker fuel oil from Singapore and Malaysia to Chinese bunkering ports is at least 1mn t a month, said traders. Market participants have noticed that export volumes to China have decreased since March.
The slowdown in cargo movement towards China could have resulted from increased production of LSFO bunker fuel from domestic refiners. Production rose after Chinese authorities began to allow LSFO refiners to claim a rebate on the 13% value-added tax (VAT) paid on sales of fuel oil into the bonded market from 1 February, spurring interest in exports to bonded tanks.
March and April fuel oil exports from Singapore and Malaysia to China were estimated at around 550,000-650,000t and 650,000-750,000t respectively, according to market participants. Total February fuel oil exports from Singapore and Malaysia to China were well above 1mn t, said traders.
Chinese refiners began to ramp up the supply of fuel oil for sale into the bonded bunker market, after the announcement of approved plans to refund tax on fuel oil exports in February. The increase in production volumes occurred when delivered premiums for the maximum 0.5% sulphur marine fuel on a fob basis at the Zhoushan port were nearing $100/t to Singapore 0.5% marine fuel spot assessments on a fob basis.
Delivered premiums in March slumped below $50/t as Chinese refiners produced LSFO to ease pressure from high inventories of gasoline and diesel, as Covid-19 curtailed domestic demand of transportation fuel. The delivered premium stood at $29.02/t on 30 April.
Bur traders noted that the LSFO production from Chinese refineries to be sold into the bonded market is also very dependent on middle and light distillate profit margins. The impact of the issuance of fuel oil quotas on the country’s future fuel oil import patterns is still in its early stages.
China’s refining fleet is designed to minimise fuel oil output. Firm domestic gasoline and diesel prices in China could prompt refiners to easily switch to produce more distillates. This could curtail LSFO production from refiners to be sold into bonded tanks, which could keep suppliers at Chinese bunkering ports turning to bunker fuel imports to meet bunker demand in the bonded market.
China’s bonded bunker sales, including LSFO, high-sulphur fuel and marine gasoil, totalled 13.18mn t in 2019 and were largely supplied by imported cargoes from all over the world, mostly from Singapore. Sales at Zhoushan port rose to 993,000t during January-March, up by 14% a year earlier.
Photo credit and source: Argus Media
Published: 6 May, 2020
Prompt HSFO tight in Fujairah and Singapore; Singapore port authority mulls additional fuel quality tests; Availability normal in Hong Kong and Zhoushan.
MEBC21 held on 26 to 27 January is free to access for delegates worldwide and will explore the theme of ‘building resilience in a challenging market’.
The FirstBio2Shipping project set to be completed in 2023 will achieve a decentralised production of bio-LNG designated for use in the maritime industry.
580,964 barrels of crude oil transferred from “Nissos Tinos Majuro” vessel to the 330-metre length “C. Grace” vessel will be bound for South Korea.
Oil tankers MT Nautica Kota Tinggi, MT Arista Leo, MT Jw Jewel, and MT Liberty among 15 vessels anchored illegally in the Tompok Utara anchorage area.
‘Based on current fundamentals, we do not see any downside below $100/bbl,’ concludes Yaw Yan Chong, the Director of Oil Research at Refinitiv.
Cash of SGD 4.43 million and USD 243,100, and one piece of 100-gram gold-coloured bar recovered in safe belonging to Abdul Latif Bin Ibrahim kept at Extra Space warehouse storage facility, show court documents.
Program introduces periodic assessments, mass flow metering data analysis, and regular training for relevant key personnel to better handle the MFMS to ensure a high level of continuous operational competency.
U.S. Claims Register Summary recorded a total USD 833 million claim from a total 180 creditors against O.W. Bunker USA, according to the creditor list seen by Singapore bunkering publication Manifold Times.
Glencore purchased fuel through Straits Pinnacle which contracted supply from Unicious Energy. Contaminated HSFO was loaded at Khor Fakkan port and shipped to a FSU in Tanjong Pelepas, Malaysia to be further blended.
Individuals were employees of surveying companies engaged by Shell to inspect the volume of oil loaded onto the vessels which Shell supplied oil to; they allegedly accepted bribes totalling at least USD 213,000.
MPA preliminary investigations revealed that the affected marine fuel was supplied by Glencore Singapore Pte Ltd who later sold part of the same cargo to PetroChina International (Singapore) Pte Ltd.
