Analysis

JLC China Bunker Market Monthly Report (September 2022)

China’s bonded bunker fuel sales rolled back in September, as bonded bunker fuel supply tightened in several regions while bunkering demand was flat.

Published

1 year ago

October 14, 2022

Admin

Bonded bunker fuel sales in Zhoushan September

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.

China bunker exports by region sept 2022

China major blending producers bunker supply sept 2022

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.

Bonded bunker fuel imports by source aug 2022

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.

China main oil blending feedstock prices 2022

China Domestic trading 180 cst bunker fuel sept

China bunker blending profit by region sept 2022

Editor
Yvette Luo
+86-020-38834382
[email protected]

Sales (Beijing)
Tony Tang
+86-10-84428863
[email protected]

Sales (Singapore)
Ginny Teo
+65-31571254
[email protected]
[email protected]

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

Bunker Fuel

Integr8 Fuels: Off spec issue with MGO equally likely to occur as with HSFO

In its Bunker Quality Trends Report Q3 2023, Integr8 highlighted that the industry is equally likely to face an off specification issue with MGO as with HSFO, with VLSFO being one third less likely.

Published

3 weeks ago

November 15, 2023

Admin

Integr8 Fuels, the bunker trading and brokerage arm of Navig8, on Tuesday (7 November) released its Bunker Quality Trends Report Q3 2023, analysing data from 120 million metric tons of supply, to reveal key trends relating to fuel quality and availability. An excerpt of the report is as follows:

Introduction: Challenges fueling change

As we come to the end of another year in the world of bunkers that seems to have passed with the blink of an eye, our minds shift towards the challenges on the horizon and how as an industry we need to embrace change to profit and succeed in the future.

This is the third Integr8 Fuels quality report covering the last six months of supplies globally where we again dissect and compare the likelihood of hidden losses and off specification issues across all commercial grades of bunkers and key ports.

Using ‘best in class’ available data from over 120 million metric tons (MT) of deliveries globally across 1,300 locations and from over 800 suppliers, we will also assess fuel quality trends using our own Integr8 Quality Index which scores the proximity (or otherwise) of individual parameters within each sample to the relevant table 1 or table 2 specification limits within ISO 8217.

Finally, given the context of the incoming changes we will consider some of the challenges that decarbonisation and verification of emissions will bring to the industry.

Part 1: Off specification frequencies

How likely are we to be faced with an off specification situation?

In the last 180 days, owners’ analysis available to Integr8 Fuels has highlighted that you are equally likely to have an off specification issue with marine gas oil (MGO) as with high sulphur fuel oil (HSFO) with very low sulphur fuel oil (VLSFO) being one third less likely (see figure 1).

What is the likelihood of receiving noncompliant or critically off spec bunkers?

It is always important to consider the context of the off specification incidents.

To do this it is essential to consider the likelihood of MARPOL Annex VI (sulphur) or SOLAS (flash point) infractions and the likelihood of critical off specification incidents such as cat fines, total sediment potential, used lubricating oils, sodium and ash content (high risk) against routine and easily rectifiable off specification issues classified “low risk” such as a high viscosity in HSFO.

The rule of thumb when comparing off specification incidents by grade is that the parameters targeted in any blending model are the most likely to be outside the specification.

For example, VLSFOs are targeted on sulphur, with the price difference for 50,000MT of fuel with a sulphur content of 0.49 compared to 0.45 possibly equating to hundreds of thousands of dollars. It’s hardly surprising, therefore, that both VLSFO and MGO, both of which are blended to a sulphur target, have more prevalence of MARPOL Annex VI non-compliances at 0.5% and 0.1% respectively.

However, MARPOL Annex VI is not the only compliance issue - we cannot ignore the requirement for flash point being 60°C or above as demanded by SOLAS. Indeed, off specification flash point, particularly with LSMGO, may be an unintended consequence of pulling low sulphur automotive or inland grades into the bunker pool as identified later in this paper.

High risk off specification incidents, defined as the total of both compliance and high risk off specifications, are seen to be most prevalent in MGO followed by VLSFO and, finally, HSFO. In fact, if you strip out compliance off specification, incidents relating to total sediment potential (TSP), aluminium and silicon (Al+Si) etc. for residual grades are very low indeed.

That said, there are many nuances, from region to region, to port-to-port, and even supplier-to-supplier at the same location. It therefore remains essential to consider these when buying bunkers and we will address some of the challenges later in the paper.

Availability of products (September 2023)

Unsurprisingly, marine gas oil is the most available product (640 ports) given the ability to substitute and supply higher quality inland or automotive grades and logistical ease of supplying what are quite often small quantities.

VLSFO is also seen to be readily available across all continents but at 28% fewer ports (458

ports), this because of larger quantities being ordered and the storage and barge infrastructure to support these supplies in general.

High sulphur fuel oil is the only product which is not readily available, with only 231 ports listed as of September 2023 (see figure 2). HSFO availability is centered around bunkering hubs and geographically key areas likely to receive passing trade from VLCCs and / or other scrubber fitted sectors. It is important, therefore, to plan carefully for HSFO and consider the type of scrubber fitted to the vessel along with any local limitations in forthcoming voyages that may require a fuel switch to LSMGO, for example.

Biofuel blends

Data is now becoming available for tests of identified biofuels supplied globally and whilst this is still very small in comparison with conventional fuels, it is clear to see the apparent void stretching from Singapore to Europe currently present.

Moreover, we are not currently able to comment on the sustainability of the biofuels being supplied but can confidently predict that Indonesia fuels, for example, will likely be sourced from palm oil and would not satisfy a verifier of emissions. ARA, and in particular Rotterdam, is seen to be the epicenter of supply in Europe given the current subsidies available in the Netherlands. VLSFO blends are almost exclusively limited to bunker hubs.

Which specifications are being traded?

Even as we eagerly anticipate the new version of ISO 8217 hopefully expected in early 2024, we continue to work in the past when it comes to the specifications we buy and sell on a day-to-day basis.

The scale of the challenge can be laid bare by considering the charts below, (figures 4 and 5), which identify the split of residual and distillate ISO 8217 grades traded by product group in the last 180 days.

Residual Fuels

Just over one quarter of trades are guaranteed to the latest version of the specification (2017) which is virtually unchanged compared to previous figures.

Distillate Fuels

In the case of MGO, only 18% of fuels traded were sold as 2017 fuels in the last 180 days, slightly less than previous. A very slight reduction in 2005 fuels was noted from 11% to 9%, however it is worth remembering that this specification is nearly 19 years old.

Note: The full report of Integr8 Fuels’ Bunker Quality Trends Report Q3 2023 can be found here.

Photo credit: Integr8 Fuels
Published: 15 November 2023

Bunker Fuel

JLC China Bunker Market Monthly Report (October 2023)

Country tallied roughly 1.63 million mt of bonded bunker fuel sales in the month, with the daily sales down by 5.74% from September to 52,419 mt, JLC’s data shows.

Published

4 weeks ago

November 10, 2023

Admin

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

Bunker Fuel Demand

China’s bonded bunker fuel sales decrease in October

China’s bonded bunker fuel sales decreased further in October, because of tighter supply.

The country tallied roughly 1.63 million mt of bonded bunker fuel sales in the month, with the daily sales down by 5.74% from September to 52,419 mt, JLC’s data shows.

The sales by Chimbusco, Sinopec Zhoushan and SinoBunker slid to 520,000 mt, 580,000 mt and 70,000 mt in the month respectively, while those by China ChangJiang Bunker (Sinopec) stabilized at 35,000 mt. At the same time, enterprises with regional bunkering licenses sold about 420,000 mt of bonded bunker fuel, up from 388,300 mt in September.

China’s bonded bunker fuel sales continued to drop, as low-sulfur fuel oil supply tightened and prices stayed relatively high. Meanwhile, the barging capacity at certain ports was affected by bad weather, which also depressed the sales.

China’s bonded bunker fuel exports inch down in Jan-Sept

China’s bonded bunker fuel exports edged down in the first nine months of this year, mainly because of a decline in domestic low-sulfur fuel oil (LSFO) output.

The country exported about a total of 15.24 million mt of bonded bunker fuel in January-September, a dip of 0.66% from the same months in 2022, JLC estimated, with reference to data from the General Administration of Customs of PRC (GACC).

Among the exports were 14.44 million mt of heavy bunker fuel and 802,600 mt of light bunker fuel, which accounted for 94.73% and 5.27% of the total, respectively.

Regarding the exports by supplier, enterprises with national bunkering licenses exported about 12.15 million mt of bonded bunker fuel in the nine months, accounting for 79.69%, while those with regional bunkering licenses supplied about 3.10 million mt, accounting for 20.31%.

Chinese refiners reduced their bonded bunker fuel exports in the first three quarters of this year, as domestic supply decreased amid falling LSFO production. Refineries lowered their LSFO output in the period when their production enthusiasm was greatly depressed by less considerable margins. The country produced about 11.10 million mt of LSFO in January-September, a cut of 5.45% year on year, JLC’s data shows.

In September alone, China’s bonded bunker fuel exports settled at 1.58 million mt, down by 2.79% from the previous month and 21.13% from a year earlier. Heavy bunker fuel exports amounted to 1.47 million mt, accounting for 92.73% of the total, while light bunker fuel exports stood at 115,200 mt, occupying 7.27%.

Suppliers with national bunkering licenses tallied approximately 1.18 million mt in the month, accounting for 74.23% of the country’s total, with Sinopec Fuel Oil and Chimbusco taking 64.35%. At the same time, enterprises with regional licenses exported about 408,300 mt, accounting for 25.77%.

JLC China Bunker Market Monthly Report (October 2023)

Domestic-trade bunker fuel demand extends gains in October

Domestic-trade bunker fuel demand extended gains in October, because of post-holiday restocking.

Domestic-trade heavy bunker fuel demand settled at 400,000 mt in the month, rising by 40,000 mt or 12.12% month on month, JLC’s data shows. Some shipowners increased purchases after the holiday for the National Day, as they had run out of stockpiles. Meanwhile, high-sulfur fuel oil prices fell to a relatively low level, which also attracted buyers to make deals.

Domestic-trade light bunker fuel demand surged to 165,000 mt in October, growing by 25,000 mt or 19.23% from a month earlier, the data indicates. Downstream buyers showed higher buying interest when MGO prices rolled back. At the same time, shipping demand at inland ports increased, with coal transportation speeding up amid the heating season in North China.

Bunker Fuel Supply

China boosts its September bonded bunker fuel imports

China boosted its bonded bunker fuel imports month on month in September, as domestic low-sulfur fuel oil (LSFO) output decreased rapidly.

The country tallied about 389,800 mt of bonded bunker fuel imports in the month, surging by 27.18% month on month, JLC estimated, with reference to data from the General Administration of Customs of PRC (GACC).

Domestic refineries slowed down their LSFO production amid bad margins, leading refiners to import more bonded low-sulfur bunker fuel to meet demand. The country produced about 1.17 million mt of LSFO in the month, with the daily output dropping by 5.40% month on month to 39,000 mt, JLC’s data indicates. Meanwhile, some distributors expanded their bonded low-sulfur bunker fuel imports as more unit maintenance and export quota tightness triggered fears of a further decline in LSFO output in the fourth quarter.

Imports of high-sulfur bunker fuel and marine gas oil (MGO) largely stabilized at a normal level.

Russia surpassed Malaysia and became the largest supplier by shipping 214,000 mt of bonded bunker fuel to China, accounting for 54.9% of China’s total imports. Malaysia slipped to the second place with 61,800 mt, accounting for 15.9%, while Singapore ranked third with 60,900 mt, occupying 15.6%. Shipments from South Korea were reduced to only 53,100 mt, accounting for 13.6% and bringing the country to the fourth place.

On a year-on-year comparison, however, China’s bonded bunker fuel imports fell by 8.90%.

China’s bonded bunker fuel imports totaled 2.88 million mt in the first nine months of this year, plunging by 19.18% from the corresponding months in 2022, decelerating from a 20.58% slump in January-August.

Domestic-trade bunker fuel supply continues to grow in October

Domestic-trade bunker fuel supply continued to grow in October, as blenders boosted production when their blending margins for bunker fuel were widened by a drop in blendstock prices.

Chinese blenders supplied about 450,000 mt of domestic-trade heavy bunker fuel in the month, a boost of 60,000 mt or 16.22% month on month, JLC’s data indicates.

Similarly, refineries ramped up their light bunker fuel production amid relatively fair margins. Domestic-trade marine gas oil (MGO) supply rose to 180,000 mt in October, an uplift of 20,000 mt or 11.76% from September.

Bunker Prices, Profits

Editor
Yvette Luo
+86-020-38834382
[email protected]

Sales (Beijing)
Tony Tang
+86-10-84428863
[email protected]

Sales (Singapore)
Ginny Teo
+65-31571254
[email protected]
[email protected]

Photo credit: JLC Network Technology
Published: 10 November, 2023

Analysis

DNV: Methanol-fuelled order trend continues, with first ammonia DF newbuilding contracts recorded in Oct

‘Finally, we have order confirmation on the first ocean going vessels with ammonia propulsion,’ exclaimed Martin Wold, Principal Consultant in DNV’s Maritime Advisory business.

Published

1 month ago

November 6, 2023

Admin

Latest figures from DNV’s Alternative Fuels Insight (AFI) platform in October saw six LNG-powered vessels added to the database. Additionally, the trend of increased orders for methanol-powered vessels continues, with 14 methanol-fuelled vessels ordered.

October also saw the first confirmed order for two ocean-going vessels equipped with ammonia dual fuel systems.

Following in the footsteps of the first orders that were made for LNG, methanol, and LPG powered vessels, the initial orders for ammonia-fuelled vessels are for ships designed to also transport the same fuel as cargo.

“Finally, we have order confirmation on the first ocean going vessels with ammonia propulsion. This simplifies the chicken and egg dilemma related to fuel availability versus demand,” exclaimed Martin Wold, Principal Consultant in DNV's Maritime Advisory business.

“It also addresses crew training, as crew will already be trained specifically on gas and ammonia carriers, so this does not become an extra burden or risk to manage.

“Furthermore, we see that the drivers for alternative fuels in general, and the push for ammonia as a fuel in particular, compared to what was the case in the early days for LNG and methanol respectively, are much stronger at this stage of the industry development.

“So, we will see orders for other ship types even before we get operational experience from gas carriers using ammonia as a fuel.”