• Follow Us On Our Preferred Social Media Platform:

Argus Media: China’s Zhoushan VLSFO-HSFO spread at record low

23 Oct 2020

Global energy and commodity price reporting agency Argus Media on Thursday (23 October) published an analysis of the market forces behind the narrowing spread between VLSFO-HSFO at China’s Zhoushan port:

The premium of very-low sulphur fuel oil (VLSFO) to high-sulphur fuel oil (HSFO) bunker prices in east China’s Zhoushan port has hit a record low, as tight supply boosts HSFO prices.

The VLSFO-HSFO spread narrowed to $13.20/t yesterday, the lowest since Argus launched the Zhoushan Bunker Index (ZBI) in the middle of 2019.

The completion of scrubber installations in east China has been supporting demand for HSFO in Zhoushan since around March. But HSFO supply has become unstable after the International Maritime Organization (IMO) 2020 regulations, which reduce the maximum sulphur content in marine fuels to 0.5% from 3.5%, took effect in January.

 Zhoushan, the largest bunker port in China, switched a large portion of its fuel oil storage capacity and bunker barges to 0.5% maximum sulphur VLSFO from HSFO after IMO 2020. That has led to an increase in the logistics cost for HSFO bunkering.

The relative scarcity of spot HSFO bunker deals in Zhoushan has left the market subject to big swings in prices. A deal for more than 500t of HSFO was concluded at about $323/t yesterday, while VLSFO traded in a wide range with the volume-weighted averaged at about $336/t, sending the VLSFO-HSFO spread to a record low.

HSFO imports into Zhoushan are likely to fall further in October, as supply in Singapore is also tight and high import costs make it too risky to build stocks, bunker suppliers said.


Photo credit and source:
Argus Media
Published: 23 October, 2020

Related News

Featured News

Our Industry Partners

  • argus

PR Newswire