Analysis

JLC China Bunker Market Monthly Report (July 2023)

China’s bonded bunker fuel sales fell back in July, due to bad weather in eastern regions; recorded 1.61 million mt of bonded bunker fuel sales with the daily sales dropping by 7.59% to 51,935 mt.

Published

1 year ago

August 11, 2023

Admin

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

Bunker Fuel Demand

China’s bonded bunker fuel sales retreat in July

China’s bonded bunker fuel sales fell back in July, due to bad weather in eastern regions.

The country recorded about 1.61 million mt of bonded bunker fuel sales in the month, with the daily sales dropping by 7.59% to 51,935 mt, JLC’s data indicates. The sales by Chimbusco, Sinopec Zhoushan, SinoBunker and China ChangJiang Bunker (Sinopec) were550,000 mt, 630,000 mt, 70,000 mt and 40,000 mt, respectively. At the same time, suppliers with regional bunkering licenses sold about 320,000 mt, the data also shows.

Bunkering business in East China, especially at ports such as Ningbo Zhoushan Port, was hit hard by rains

and typhoons. Meanwhile, bonded bunker fuel supply decreased in East China, which also dragged down the sales in the region. However, the sales in North and South China, where refueling demand was largely stable, did not change much.

China’s bonded bunker fuel exports rise 8.32% in H1

China’s bonded bunker fuel exports rose by 8.32% in the first half of this year amid multiple factors, speeding up from a rise of 3.35% in January-May. The country exported a total of 10.41 million mt of bonded bunker fuel in the first six months, up from 9.61million mt in the same months in 2022, JLC estimated, with reference to data from the GeneralAdministrationof Customs of PRC (GACC).

Among these exports were 9.89 million mt of heavy bunker fuel and 522,100 mt of light bunker fuel, which respectively accounted for 94.99% and 5.01% of the total.

By supplier, enterprises with national bunkering licenses exported about 8.49 million mt of bonded bunker fuel in this period, accounting for 81.56%, and those with regional licenses exported 1.92 million mt, making up 18.44%.

China’s bonded bunker fuel exports plunged on year in January when shipping demand was seasonally weak. Meanwhile, bunkering business at Chinese ports was halted during the Chinese New Year holiday and China’s customs clearance was also affected by the holiday. However, the exports rallied in February as shipping demand recovered modestly and the operation of China’s customs returned to normal after the holiday.

Bonded bunker exports surged to a 14-month high in March, mainly because of larger low-sulfur fuel oil (LSFO) production. At the same time, bunker fuel prices at Chinese ports showed an advantage over surrounding ports, attracting more foreign shipowners. But the exports fell back in April, as domestic LSFO output hit a 17-month low, due to bad margins and unit maintenance.

Domestic supply of bonded bunker fuel increased in May-June, as Chinese refiners boosted their LSFO production amid slightly recovering margins and unit restarts. China released this year’s second batch of quotas on LSFO exports in May, encouraging refiners to expand exports.As a result, China’s bonded bunker fuel exports grew rapidly in the two months.

In June alone, China exported about 2.04 million mt of bonded bunker fuel, rising by 5.25% from the previous month and 34.96% from a year earlier. Heavy bunker fuel exports amounted to 1.93 million mt, accounting for 94.57%, and light bunker fuel exports were 110,900 mt, accounting for 5.43%.

Suppliers with national licenses exported roughly 1.67 million mt in the month, accounting for 81.58% of the country’s total, with Sinopec Fuel Oil and Chimbusco taking 76.85%. At the same time, enterprises with regional licenses exported 376,000 mt, accounting for 18.42%, with PetroChina Fuel Oil (Zhoushan, Shanghai and Guangzhou) taking 227,700 mt which occupied 11.15% of China’s exports and 60.56% of regional suppliers’ total.

Domestic-trade bunker fuel demand climbs in July

Domestic-trade heavy bunker fuel demand settled at 310,000 mt in July, a rally of 10,000 mt or 3.33% month on month, JLC’s data shows. Despite a modest bounce, heavy bunker fuel demand was still relatively tepid when typhoons forced some shipowners to suspend voyages.

Meanwhile, domestic-trade light bunker fuel demand rose to about 140,000 mt, up by 5,000 mt or 3.70% from a month earlier. The bunker fuel market improved slightly amid stronger diesel, but the improvement was capped by some buyers’ wait-and-see attitude.

Bunker Fuel Supply

China slashes its bonded bunker fuel imports in H1 2023

China slashed its bonded bunker fuel imports in the first six months of 2023, largely due to lofty import costs.

The country imported approximately 1.85 million mt of bonded bunker fuel in the first half of this year, a plunge of 24.43% from the corresponding period in 2022, slowing down from a slump of 27.66% in January-May, JLC estimated, with reference to data from the General Administration of Customs of PRC (GACC).

As the largest supplier in this period, Malaysia shipped about 952,100 mt of bonded bunker fuel to China, accounting for 51.41% of the latter’s total imports. Singapore came in second with 485,800 mt, occupying 26.24%, followed by South Korea with 310,200 mt, accounting for 16.75%. Meanwhile, inflows fromJapanwere roughly 103,700 mt, making up 5.60%.

China halved its bonded bunker fuel imports in the first quarter (Q1) of this year, with the monthly imports plunging to a historical low of 175,600 mt in March. Chinese distributors prioritized domestic bonded bunker fuel over imported one, as freight rates for imported cargoes were high and imported low-sulfur fuel oil (LSFO) lacked price advantages. Meanwhile, domestic bunker fuel supply increased when refiners boosted their LSFO production, which also dragged down the imports. The country produced a total of 3.80 million mt of LSFO in Q1, up from 3.56 million mt in the same quarter of 2022, JLC’s data shows.

However, the imports rose in the second quarter (Q2) as domestic supply tightened, though freight rates for imported cargoes were still high. In view of fewer margins and unit maintenance, refiners lowered their LSFO output to roughly 3.50 million mt in the quarter, a cut of 7.73% from the previous quarter and 8.87%fromQ22022, JLC’s data indicates. The import arbitrage window opened in Q2 when China’s bonded bunker fuel prices climbed, prompting some distributors to increase imports to fill the demand gap. Meanwhile, some traders hiked their high-sulfur fuel imports, due to the decline in domestic LSFO supply.

Into the second half (H2) of this year, high freight rates will continue to depress the imports. Domestic supply of low-sulfur bonded bunker fuel is expected to be largely stable, and importers will still favor domestic resources. China’s bonded bunker fuel imports may reach 4.00-4.50 million mt in 2023, according to JLC’s projection.

Domestic-trade bunker fuel supply increases in July

Domestic-trade heavy bunker fuel supply increased in July, as blenders raised output amid growing blendstock supply.

Chinese blenders supplied about 360,000 mt of heavy bunker fuel in the month, a boost of 30,000 mt or

9.09% from June, JLC’s data shows. Refineries supplied more low-sulfur residual oil after maintenance, enabling blenders to ramp up bunker fuel production. Meanwhile, blenders showed higher blending interest, as downstream buyers became bullish on bunker fuel prices and increased purchases.

Domestic-trade marine gas oil (MGO) supply settled at 170,000 mt in the month, jumping by 20,000 mt or 13.33% from a month earlier. Refineries supplied more light bunker fuel as coking margins grew sharply amid rising product prices.

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: 11 August, 2023

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Specialised green hydrogen and derivatives platform Yamna in early December identified several potential ammonia bunkering hubs around the world.

The hubs are Port of Rotterdam, Port of Algeciras, Suez Canal, Jurong Port, and Port of Salalah.

“The shipping industry faces an ambitious challenge: reducing emissions by 20% by 2030 (compared to 2008 levels) and achieving net-zero emissions by 2050, in alignment with IMO targets,” it stated.

“Achieving these goals in the medium to long term depends on the adoption of alternative low-emission fuels like green ammonia and methanol.

“Among these, ammonia is attracting growing interest as a viable option. Unlike methanol, it is not constrained by biogenic CO2 availability, and its production process is relatively simple.”

However, the firm noted kickstarting ammonia bunkering on a large scale required four enablers to align:

Ammonia fuel supply
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It believed ammonia bunkering hubs will first emerge where affordable and scalable ammonia supply is available.

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Port of Long Beach releases Clean Marine Fuels White Paper

Document intended to prepare and position the port and its stakeholder for adopting low carbon alternative fuels.

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The Port of Long Beach (PLB) in late December released the Clean Marine Fuels White Paper as part of efforts to identify solutions capable of reducing emissions from ships.

“To understand the opportunities and challenges related to the adoption of clean marine fuels, the Port of Long Beach hired ICF Consulting to develop this white paper as an educational resource and guidance document,” stated PLB

“This document is also intended to prepare and position the port and its stakeholder for adopting low carbon alternative fuels.

“The white paper provides high level information on the array of currently available low carbon marine fuels, along with an exploration of the potential infrastructure needs for their deployment.”

The document covers the use of different types of clean bunker fuels such as green hydrogen, green methanol, green ammonia, renewable LNG and biofuels for shipping.

“The shift to clean marine fuels is no longer optional but a necessity for the sustainability of the maritime industry,” stated PLB in its closing remarks.

“This transition, while presenting challenges such as high costs, limited fuel availability, and the need for extensive infrastructure development, is advancing due to evolving policy frameworks and growing industry commitment.

“Addressing these obstacles will require targeted initiatives and robust collaboration between public and private sectors. Continued policy support, government funding, and sustained industry commitment will be essential to driving this progress and ensuring the long-term sustainability of maritime operations.”

Editor’s note: The 123-page Clean Marine Fuels White Paper may be downloaded from the hyperlink here.

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Published: 26 December 2024

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Clyde & Co: FuelEU Maritime Series – Part 6: Legal issues

Bunker purchasers should consider the wording of their bunker supply contracts carefully and ensure that they are comfortable with the contractual provisions.

Published

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December 26, 2024

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Global law firm Clyde & Co on Thursday (19 December) released the final instalment of its six-part series uncovering the FuelEU Maritime Regulation.

In it, the firm looked at the legal issues that could potentially arise between various parties, such as owners, charterers, ship managers, bunker suppliers, and ship builders, as a result of the compliance requirements imposed by the Regulation.

The following is an excerpt from the original article available here:

Bunker supply contracts - legal issues

Both vessel owners and bunker purchasers will want to ensure that they are able to take advantage of the preferential treatment provided under the FuelEU Regulation for consuming renewable fuels, including biofuels and renewable fuels of non-biological origin (RFNBOs) (such as methanol and ammonia).

Article 10 of the FuelEU Regulation states that such fuels must be certified in accordance with the Renewable Energy Directive (RED) 2018/2001. If the fuel consumed by the vessel does not meet the applicable standards or have the appropriate certification, then it “shall be considered to have the same emissions factors as the least favourable fossil fuel pathway for that type of fuel”[1].

In order to confirm that the fuel complies with greenhouse gas (GHG) intensity and sustainability requirements, the vessel owner and bunker purchaser will want to ensure that the bunker supplier provides the appropriate certification required under the FuelEU Regulation. The EU has required certification of such fuels, with the aim of guaranteeing “the environmental integrity of the renewable and low-carbon fuels that are expected to be deployed in the maritime sector.”[2]

The FuelEU Regulation provides that the GHG intensity of fuel is to be assessed on a “well-to-wake” basis, with emissions calculated for the entire lifespan of the fuel, from raw material extraction to storage, bunkering and then use on board the vessel.

Vessel owners and bunker purchasers will, therefore, need to be mindful of the importance of establishing how “green” the fuel actually is, and of the risk of bunker suppliers providing alternative fuels that will not allow for preferential treatment under the FuelEU Regulation.

It would, therefore, be advisable for bunker purchasers to consider whether the wording of their bunkering supply contracts is sufficient to ensure that the fuel is properly certified under the FuelEU Regulation. This could include contractual provisions that require the supplier (i) to provide a bunker delivery note (BDN), setting out the relevant information regarding the supply (such as the well-to-wake emission factor), and (ii) to provide the necessary certification under a scheme recognised by the EU.

Bunker purchasers should also be mindful that bunkering supply contracts often contain short claims notification time bars and provisions restricting claims for consequential loss. Issues could therefore arise where a purchaser tries to advance a claim against the supplier for consequential loss due to a lack of certification, but the bunker supplier argues that such losses are excluded under the terms of the bunker supply contract.

Bunker purchasers should therefore consider the wording of their bunker supply contracts carefully and ensure that they are comfortable with the contractual provisions.

Photo credit: CHUTTERSNAP from Unsplash
Published: 26 December 2024