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JLC China Bunker Market Monthly Report (September 2022)

JLC China Bunker Market Monthly Report (September 2022)

14 Oct 2022

Beijing-based commodity market information provider JLC Network Technology Co. recently shared its JLC China Bunker monthly report for September 2022 with Manifold Times through an exclusive arrangement:

Bunker Fuel Demand

Bonded bunker fuel sales retreat in September

China’s bonded bunker fuel sales rolled back in September, as bonded bunker fuel supply tightened in several regions while bunkering demand was flat. In addition, the bunkering business was hit hard at certain ports that were swept by the typhoon.

The country sold about 1.66 million mt of bonded bunker fuel in September, a decline of 8.06% from the previous month, JLC’s data shows. Bonded bunker fuel sales by Chimbusco and Sinopec Zhoushan settled at 570,000 mt and 670,000 mt in the month respectively. Meanwhile, those by SinoBunker and China ChangJiang Bunker (Sinopec) were 50,000 mt and 40,000 mt respectively. PetroChina Zhoushan recorded about 157,200 mt of bonded bunker fuel sales in the month, versus 110,800 mt in August. Suppliers who held local licenses sold about 325,000 mt of bonded bunker fuel, accounting for about 20% of the total, up from 13.61% a month earlier, thanks to the jump in the sales by PetroChina Zhoushan.

China’s bonded bunker fuel exports extended gains in August, on the back of relatively high production combined with a new batch of export quota in the previous month.

China recorded nearly 2.03 million mt of bonded bunker fuel exports in August 2022, surging 19.68% month on month and 20.09% year on year, according to the data from the General Administration of Customs of PRC (GACC).

The exports of heavy bunker fuel and light marine gas oil (MGO) were around 1.94 million mt and 93,100 mt in the month, respectively, making up 95.41% and 4.59% of the total. The bonded bunker fuel exports by state-owned enterprises were roughly 1.80 million mt in the month, occupying 88.66%, while those by local independent enterprises settled at 230,100 mt, accounting for 11.34%.

The leap in the exports came as China released a new batch of quota on LSFO exports in July which encouraged the refiners who ran short of export quota to increase their production to some degree. Despite a month-on-month drop, the country’s LSFO production remained relatively high in August. However, domestic demand was hit by the re-spread of the virus, forcing refiners to expand their bonded bunker fuel exports.

Domestic heavy bunker fuel demand expands in September

Domestic-trade heavy bunker fuel demand strengthened in September, as bunker fuel prices fell and the approaching of the National Day holiday aroused some replenishment. The demand for heavy bunker fuel amounted to 420,000 mt in September, an increase of 20,000 mt or 5% from August, JLC’s data indicates.

In contrast, demand for light bunker fuel shrank, as marine gas oil prices were still relatively high and downstream buyers just purchased on a need-to basis. The demand for light bunker fuel was 150,000 mt in the month, down by 10,000 mt or 6.67% month on month, JLC’s data shows.

Bunker Fuel Supply

China sees further fall in Aug’s bonded bunker fuel imports

China’s bonded bunker fuel imports continued to fall in August, as relatively high international prices continued to depress Chinese buyers’ interest.

The country imported about 334,900 mt of bonded bunker fuel in August 2022, a dip of 5.02% from the previous month, according to data from the General Administration of Customs of PRC (GACC).

Despite a monthly drop, international bunker fuel prices stayed relatively high in August amid steep freight rates. As a result, buyers gave priority to domestic low-sulfur resources, of which prices continued to sink and were still more competitive than imported ones. In addition, market participants who anticipated further price declines reduced their purchases of imported low-sulfur resources.

On a year-on-year comparison, the imports plunged by 57.24%, GACC data shows. The slump was mainly because of the expansion of LSFO production across the country. Chinese refiners have been accelerating their LSFO production in recent years after China rebated value-added tax on fuel oil supplied to international ships as from February 1, 2020.

In terms of the supplier, the UAE regained the top spot by exporting 153,900 mt of bonded bunker fuel to China in August, accounting for 45.95% of China’s total bonded bunker fuel imports. Malaysia came in second with the imports from the country amounting to 140,000 mt, making up 41.82%. The imports from South Korea stabilized at 41,000 mt, accounting for 12.23%, helping the country maintain third place. There was still no imported bonded bunker fuel from Singapore in the month.

Domestic blended bunker fuel supply slightly down in September

Domestic supply of blended heavy bunker fuel dipped in September, dragged down by descending demand and poorer margins amid higher costs.

Chinese blenders supplied around 460,000 mt of heavy bunker fuel in September 2022, a modest drop of 20,000 mt or 4.44% from a month earlier, JLC’s data shows. The drop was partly ascribed to a decrease in the supply of low-sulfur asphalt, shale oil, coal-based diesel and light coal tar, which are important blendstocks for heavy bunker fuel. In addition, relatively high costs brought blending margins down, discouraging blenders from supplying heavy bunker fuel. Benders had to cut their prices to promote sales when domestic demand for bunker fuel was sluggish and the delivery was not smooth.

As for light bunker fuel, the supply of domestic marine gas oil (MGO) stabilized at 180,000 mt in the month. Coking margins were still good, but the overall supply did not grow, because refiners preferred to produce diesel rather than bunker fuel amid soaring diesel prices.

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 October, 2022