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China: Enterprises optimistic of bonded bunkering market expansion, but highlight challenges ahead

16 Dec 2021

The following article first published by Manifold Times on 16 December was sourced from China’s domestic market through a local correspondent. An online translation service was used in the production of the current editorial piece:

The State Council of China recently gave permission to start bonded bunkering operations for international sailing vessels at Shanghai and Guangzhou, said a Sunday (12 December) report by China Energy News.

A number of local enterprises applauded the development, and believed it  marks the expansion of the Chinese bonded marine fuel oil market.

In 2020, seven domestic Chinese ports ranked among the top ten global port throughput. Ningbo Zhoushan Port was the largest marine fuel oil filling port, with an annual filling capacity of 4.7 million metric tonnes (mt).

“The oil supply business [bunkering] process of each single ship in China is more complex and less convenient,” says Yu Xiao, fuel oil analyst at Jin Lianchuang.

“At the same time, China’s bonded marine fuel oil has been highly dependent on imports for a long time, resulting in a lack of price competitive advantage.

“This prevented, international sailing ships docked at domestic ports from conducting bunkering operations, so the market size [for bonded bunkering operations] did not match the economic development level of Chinese domestic ports.

In recent years, in order to improve the efficiency of oil supply, Chinese customs, maritime affairs, border inspection and port free trade zones have introduced a number of innovative measures in terms of customs and policies to improve the bonded marine fuel oil market.

Guangzhou Port is the largest comprehensive main hub and container port in South China. At present, it is linked to 131 international container liner routes.

In 2020, the cargo throughput at Guangzhou Port is 636 million tons, ranking fourth in the world. Therefore, Guangzhou also has unique advantages in developing its bonded marine oil market.

A 2021 China Energy and Chemical Industry Development Report released by Sinopec predicts China’s fuel oil demand to increase from 43 million mt to 49.5 million mt in 2025.

Sinopec Fuel Oil company said it will improve its supply capacity and the quality of marine fuel oil production to prepare for the expected increase in China’s bonded marine oil market

“With the continuous decentralisation of the international ship bonded refueling permit, more oil supply enterprises will enter the relevant industries in the future, and it is also necessary to effectively improve the storage, distribution and fleet renewal,” says Sinopec.

“Infrastructure and equipment should be improved to reduce the oil supply operation time and to improve the quality and efficiency of bunkering operations.

“The most important thing is to optimise the regulatory environment, improve the regulatory efficiency, and provide greater regulatory convenience for the receiving vessel so as to greatly reduce cost inefficiencies of the bunkering industry.

“Overall, on the whole, in the era of low sulphur China’s bonded shipping oil market will develop well and the prospects are relatively optimistic.”

Related: Chinese government issues bonded bunkering permission at Guangzhou port
Related: China: Zhejiang Oil Center launches price information service for the storage of oil products
Related: China: Pilot digital trial reduces documentation time for Zhoushan bunkering ops

 

Photo credit: MarineTraffic / kapoor nischint
Published: 16 December, 2021

 

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