Hong Kong-listed Cosco Shipping Holdings Co., Ltd., which provides shipping services to Chinese state-owned China Cosco Shipping Corporation Limited, on Wednesday (4 December) stated the company’s fuel procurement plans for 2020.
The company noted it will still continue to purchase fuel from China Marine Bunker (Petrochina) Co., Ltd., a 50/50 JV between Cosco and Petrochina [known as Chimbusco], and China Shipping & Sinopec Suppliers Co., Ltd. [known as Sinobunker], a 50/50 JV between Cosco Shipping and Sinopec for the next year.
“In addition, the Group has adopted an internal control policy on purchase of fuel from the Cosco Shipping Group,” it states.
“Cosco Shipping Group has set up a fuel purchase platform to centralise all purchases, which can achieve lower purchase costs as well as higher services quality from the relevant suppliers.”
Moving forward, the firm expects the price of 0.5%S LSFO to be approximately USD 150 per tonne to USD 250 per tonne higher than 3.5%S HSFO; with the IMO 2020 sulphur emission cap taking effect, the fuel price is expected to increase further.
According to the 2019 interim report of the company, as at 30 June 2019, the container fleet operated by the Group had 493 vessels, with the total shipping capacity reaching 2,896,881 TEUs, representing a growth of 5% as compared to the end of 2018.
As such, the Directors are of the view that the increase in demand for fuel under which the proposed annual caps were based is in proportion to the estimated increase in fleet size.
Based on the historical purchase of fuel by Cosco Shipping Holdings, the amount of fuel purchased was approximately 4.7 million tonnes, 5.3 million tonnes and 2.5 million tonnes for the years ended 31 December 2017 and 2018 and the six months ended 30 June 2019, respectively.
It is estimated that the demand for fuel of the Cosco Shipping Group will increase from about 5.3 million tonnes in 2020 to approximately 5.8 million tonnes in 2022.
Affiliated firm Cosco Shipping International (Hong Kong) Co., Ltd saw a 99% fall in traded volume for the six months ended 30th June (1H) 2019 due to risk factors.
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Photo credit: Cosco Shipping
Published: 5 December, 2019
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