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JLC China Bunker Market Monthly Report (February 2023)

JLC China Bunker Market Monthly Report (February 2023)

16 May 2023

Beijing-based commodity market information provider JLC Network Technology Co. recently shared its JLC China Bunker monthly report for February 2023 with Manifold Times through an exclusive arrangement:

Bunker Fuel Demand

China’s bonded bunker fuel sales continue to drop in February

China’s bonded bunker fuel sales continued to drop in February, as shipping demand slackened amid flabby economy. The country sold about 1.46 million mt of bonded bunker fuel in the month, dipping by 34,000 mt or 2.28%month on month, JLC’s data indicates. In detail, the sales by both Chimbusco and Sinopec Zhoushan slid to 550,000 mt, down from 560,000 mt and 580,000 mt respectively. By contrast, the sales by SinoBunker and China ChangJiang Bunker (Sinopec) rose to 60,000 mt and 40,000 mt, up from 50,000 mt and 35,000 mt respectively. Meanwhile, suppliers with regional licenses sold roughly 260,000 mt, down from 269,000 mt in the previous month.

Bearish sentiment in China’s bonded bunker fuel market persisted and foreign shipowners still held await-and-see attitude. Meanwhile, bunker fuel supply in South China descended, which also contributed to the drop in sales. Still, China boosted its low-sulfur fuel oil (LSFO) production in the month, capping the drop in sales to some degree.

China cuts its bonded bunker fuel exports in Dec

China exported 1.20 million mt of bonded bunker fuel in the last month of 2022, a decline of 7.21%month on month and 13.42% year on year, JLC estimated, with reference to data from the General Administration of Customs of PRC (GACC).

Among these, heavy bunker fuel exports were 1.13 million mt, accounting for 94.19%, while MGO exports were 69,800 mt, making up 5.81%. The exports by suppliers with national licenses were 910,300 mt, accounting for 75.78% of the total exports, with Sinopec Fuel Oil, Chimbusco, SinoBunker and China ChangJiang Bunker (Sinopec) taking 404,000 mt, 444,900 mt, 49,800 mt and 11,600 mt respectively. At the same time, companies with regional licenses exported about 291,000 mt, making up 24.22%.

Chinese refiners cut their bonded bunker fuel exports, as demand in the shipping market remained weak when the negative impact of the epidemic lingered. Meanwhile, most refineries cut their LSFO production when they found fewer margins amid a fall in China’s bonded bunker fuel prices.

Given an outlook of recovering demand, China is expected to expand its bonded bunker fuel exports in 2023. Also, the country is likely to hike its LSFO production this year, making efforts to expand its bonded bunker fuel market. (Note: There is no update on export and import data for January, as the General Administration of Customs of the PRC is expected to combine January and February data instead of providing data for a single month. The combined data for January-February are expected to be released in late March, and JLC will update the data in the March version report.)

Domestic bunker fuel demand recovers in February

Domestic-trade bunker fuel demand recovered in February, but the recovery was slower than expected due to relatively tepid shipping demand. Some shipowners showed low buying interest, as bunker fuel prices in East and South China were relatively high amid tightening supply.

Domestic demand for heavy bunker fuel gained 30,000 mt or 8.82% to 340,000 mt in February, and that for light bunker fuel jumped by 20,000 mt or 18.18% to 130,000 mt.

Bunker Fuel Supply

China’s bonded bunker fuel imports plunge in Dec 2022

China’s bonded bunker fuel imports plunged on month in December 2022, due to a decrease in Chinese buyers’ import interest coupled with a relatively high base in the previous month.

China tallied 414,300 mt of bonded bunker fuel imports in the month, tumbling by 34.24% month on month, JLC estimated, with reference to data from the General Administration of Customs of PRC (GACC).

Malaysia still led all suppliers in December, exporting 288,400 mt of bonded bunker fuel to China, accountingfor 70% of China’s total imports. Meanwhile, South Korea and Singapore ranked second and third with80,690 mt and 39,000 mt, occupying 21% and 9% respectively.

Domestic buyers sharply reduced their bonded bunker fuel imports, amid relatively steep international bunker fuel prices and high freight rates. Prices of China’s bonded bunker fuel with the maximum sulfur content at 0.5% averaged $605/mt in the month, a drop of 11.68% from a month earlier, more significant than a fall of 9.20% in Singapore’s prices. Domestic bunker fuel prices were still relatively competitive than imported ones.

Also underlying the plunge in the imports was a relatively high level in November. Chinese buyers had hiked their bonded bunker fuel imports to a 12-month high in November, and they lacked enthusiasm to further expand imports in December, with the year-end drawing near.

On a year-on-year comparison, however, the imports gained 2.02% in December.

The country imported an accumulation of 5.11 million mt of bonded bunker fuel in 2022, plummeting by 38.88% year on year, accelerating from a slump of 30.91% in 2021. The plunge was mainly due to booming domestic LSFO production. China produced about 15.90 million mt of LSFO last year, soaring 41.90%year on year, JLC’s data indicates. (Note: There is no update on export and import data for January, as theGeneral Administration of Customs of the PRC is expected to combine January and February data instead of providing data for a single month. The combined data for January-February are expected to be released in late March, and JLC will update the data in the March version report.)

Domestic bunker fuel supply increases in February

Domestic bunker fuel supply increased in February, as more ships came back online after the Chinese New Year holiday. Chinese blenders supplied about 360,000 mt of heavy bunker fuel in February, growing by 40,000 mt or 12.5% from a month earlier. Meanwhile, the supply of marine gas oil (MGO) settled at 145,000mt, a rise of 5,000 mt or 3.57%, JLC’s data shows.

Most of the blend stocks such as residual oil, light coal tar and coal-based diesel were delivered to North China, resulting in abundant bunker fuel supply and relatively high inventories in the region. However, the supply of blend stocks and bunker fuel was tight in South China, putting a cap on the increase in domestic-trade bunker fuel supply.

Bunker Prices, Profits

Editor
Yvette Luo
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Sales (Beijing)
Tony Tang
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Sales (Singapore)
Ginny Teo
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JLC Network Technology Co., Ltd is recognized as the leading information provider in China. We specialized in providing the transparent, high-value, authoritative market intelligence and professional analysis in commodity market. Our expertise covers oil, gas, coal, chemical, plastic, rubber, fertilizer and metal industry, etc.

JLC China Bunker Fuel Market Monthly Report is published by JLC Network Technology Co., Ltd every month on China bunker market, demand, supply, margin, freight index, forecast and so on. The report provides full-scale & concise insight into China bunker oil market.

Note: China-based commodity market information provider JLC Technology has been providing Singapore bunkering publication Manifold Times China bunker volume data since 2020. Data from that period is available here.

Photo credit: JLC Network Technology
Published: 16 May, 2023