ESAI Energy report explains Zhoushan bunker volume growth in China
A new report ‘China’s Changing Bunker Sector: Insights into Bunker and Fuel Oil Markets around IMO 2020, 2019-2025’ published by oil market analysis and forecasting firm ESAI Energy explains the rapid growth of Zhoushan port’s bunkering volume, amongst others.
“Zhoushan has been promoted to compete with Singapore, but its bunker sales have grown mainly by taking market share from other Chinese ports, thanks to its relative advantages, including preferential policies and reforms in the bunkering procedure,” said ESAI Energy analyst Yao Wu.
“China’s potential to become a regional bunkering hub not only depends on the upcoming tax refund, but also on other factors, such as the extent to which it can duplicate Zhoushan’s success elsewhere. The IMO specification change presents opportunities across the global oil markets, but especially in China.”
Meanwhile, the report noted the IMO 2020 regulation to shift a large amount of bunker demand from high sulphur fuel oil (HSFO) to low sulphur fuel oil (LSFO) and gasoil across regions, especially in China.
It expects the production to rise from currently 430,000 b/d to 550,000 b/d by early 2020, as China takes advantage of the opportunity to target greater LSFO exports and even dominate the regional bunker market.
“China produces very little fuel oil given its enormous refining sector, and the fuel oil that is produced is locked inside the country due to consumption and value-added taxes,” it stated.
“While refiners receive rebates to compensate for these taxes for exporting gasoil, gasoline, and other light products, they do not for fuel oil.
“This could change very soon however with China seeing the IMO sulfur cap as an important opportunity for their refiners. This would have significant implications for Asia’s supply of compliant bunker and global trade flows.
“As each province independently prepares for IMO changes by purchasing technologies and training inspectors, inspection rates will remain low. This is one reason why China’s compliance has a moderate forecast of 83%.”
A copy of the report ‘China’s Changing Bunker Sector: Insights into Bunker and Fuel Oil Markets around IMO 2020, 2019-2025’ can be requested here.
Related: Zhoushan bunker sales from January till August up 11% on year
Related: China: Zhoushan June bunker sales volume increase 8% on year
Photo credit: Manifold Times
Published: 8 November, 2019
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