Analysis

JLC China Bunker Market Monthly Report (June 2023)

China’s bonded bunker fuel sales rebounded rapidly in June; sold about 1.69 million mt of bonded bunker fuel in the month, with the daily sales rising by 13.48% to 56,200 mt.

Published

2 years ago

July 14, 2023

Admin

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

Bunker Fuel Demand

China’s bonded bunker fuel sales rebound in June

China’s bonded bunker fuel sales rebounded rapidly in June, due to multiple factors.

The country sold about 1.69 million mt of bonded bunker fuel in the month, with the daily sales rising by 13.48% to 56,200 mt, JLC’s data shows.

Bonded bunker fuel sales by Chimbusco, Sinopec Zhoushan, China ChangJiang Bunker (Sinopec) and SinoBunker were 570,000 mt, 630,000 mt, 40,000 mt and 70,000 mt, separately. Meanwhile, suppliers with regional bunkering licenses sold about 376,000 mt, the data also indicates.

Bonded bunker fuel prices at Chinese ports showed an advantage over neighboring ports, as the competition in China’s bonded bunker fuel market intensified. Meanwhile, the release of Shanghai Bonded Bunker Fuel Quotation enhanced the competitiveness of local ports and attracted more ships to refuel. In addition, the sales at some northern ports, including Qingdao Port and Rizhao Port, increased after the supply tightness of ships in North China basically eased.

China boosts its bonded bunker fuel exports in first five months

China boosted its bonded bunker fuel exports in the first five months of this year, because of larger low-sulfur fuel oil (LSFO) production and a low base a year before.

The country tallied about 8.37 million mt of bonded bunker fuel exports in January-May, a gain of 3.35% from the same months in 2022, reversing a decline of 2.89% in January-April, JLC estimated, with reference to data from the General Administration of Customs of PRC (GACC).

Heavy bunker fuel exports were 7.96 million mt in this period, making up 95.09% of the total, while light bunker fuel exports were 411,200 mt, occupying 4.91%.

Regarding the exports by supplier, enterprises with national bunkering licenses exported about 6.83 million mt of bonded bunker fuel in the five months, accounting for 81.56%, and those with regional licenses exported about 1.54 million mt, accounting for 18.44%.

Domestic supply of bonded bunker resources increased as Chinese refiners raised their LSFO output. China produced a total of 6.01 million mt of LSFO in the five months, a modest rise of 0.72% year on year, JLC’s data shows.

Larger exports were also ascribed to a low base a year earlier when global bunkering demand was dampened by new outbreaks of the virus. China’s bonded bunker fuel exports totaled 8.10 million mt in January-May 2022, down from 8.65 million mt in the same period of time in 2021.

China exported about 1.94 million mt of bonded bunker fuel in May, soaring by 35.49% month on month and 31.28% year on year. The exports of heavy bunker fuel and MGO were 1.85 million mt and 87,400 mt, accounting for 95.49% and 4.51% respectively.

Suppliers with national bunkering licenses recorded about 1.61 million mt of bonded bunker fuel exports last month, accounting for 82.87%, with Sinopec Fuel Oil and Chimbusco taking 75.32%. Meanwhile, enterprises with regional licenses exported 332,300 mt, accounting for 17.13%, with PetroChina Fuel Oil (Zhoushan, Shanghai and Guangzhou) taking 163,000 mt which occupied 8.40% of China’s exports and 49.05% of regional suppliers’ total.

Domestic-trade heavy bunker fuel demand decreases further

Domestic-trade bunker fuel demand decreased further in June, as bearish sentiment lingered.

Domestic-trade heavy bunker fuel demand dipped to 300,000 mt in the month, down by 10,000 mt or 3.23% from a month earlier. Shipowners showed low buying interest and there were not many newly-signed orders.

Conversely, domestic-trade light bunker fuel demand ascended to 135,000 mt in June, up by 5,000 mt or 3.85% month on month. The inland shipping market perked up slightly amid the hot weather, giving a modest boost to light bunker fuel demand.

Bunker Fuel Supply

China’s bonded bunker fuel imports retreat in May

China’s bonded bunker fuel imports retreated in May, as domestic supply increased and freight rates for imported cargoes stayed exorbitant.

The country imported about 352,000 mt of bonded bunker fuel in May, a cutback of 14.95% month on month and 0.62% year on year, JLC estimated, based on data from the General Administration of Customs of PRC (GACC).

Among all suppliers, Malaysia took the lion’s share by sending 129,500 mt of bonded bunker fuel to China, which accounted for 36.79% of the latter’s total imports. At the same time, Singapore ranked second with 128,900 mt, accounting for 36.62%, while South Korea slid to the third place with 68,300 mt, making up 19.40%. In addition, arrivals from Japan amounted to 25,300 mt, occupying 7.19%.

Chinese refiners raised their low-sulfur fuel oil (LSFO) production modestly in the month, leading to an increase in domestic supply of bonded bunker resources. The country produced about 1.15 million mt of LSFO in May, with the daily output at 36,968 mt, up by 3.84% from the previous month, JLC’s data indicates.

Distributors still gave priority to domestic low-sulfur bonded bunker resources, as imported bunker fuel lacked price advantages and import costs were lofty amid high freight rates. As a result, low-sulfur bonded bunker fuel imports dropped in the month.

However, imports of high-sulfur bunker fuel and marine gas oil were relatively stable, supported by fair demand.

In the first five months of this year, China imported approximately 1.40 million mt of bonded bunker fuel, plunging by 27.66% from the corresponding months in 2022, slowing down from a 33.73% slump in January-April, JLC estimated, based on data from the GACC. The drop was partly because of larger LSFO production. The country tallied a total of 6.01 million mt of LSFO output in this period, a modest rise of 0.72% year on year, JLC’s data shows.

Domestic-trade heavy bunker fuel supply tightens in June

Domestic-trade heavy bunker fuel supply tightened further in June, as blenders continued to cut their output amid steep costs. Chinese blenders supplied about 330,000 mt of heavy bunker fuel in the month, a fallback of 10,000 mt or 2.94% from a month earlier, JLC’s data shows.

On the contrary, domestic-trade MGO supply settled at 150,000 mt in the month, a hike of 10,000 mt or 7.14% from May. Refineries showed higher production enthusiasm in view of fair coking margins, contributing to an increase in the 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: 14 July, 2023

Related Topics:Bunker fuel - MGO Business Country/region - Asia (China)

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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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Clean Marine Fuels Port of Long Beach (December 2024)

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.

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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