The Chinese port city of Zhoushan has seen an uptick in demand and is expected to lure a large number of vessels making their journeys to and from Northeast Asia to refuel in the most cost efficient way.
Since a fuel oil tax rebate effective Feb. 1, Chinese domestic refineries have ramped up supply of low sulfur marine fuel for bonded bunkering, pushing down prices to parity with Asia’s key bunkering hub of Singapore. The Zhoushan delivered marine fuel 0.5%S flat price averaged $319.11/mt so far in September, compared with $321.65/mt over the same period for delivery in Singapore, S&P Global Platts data showed.
“Demand has been steady, as Singapore prices are higher and Hong Kong supply is uncertain,” one supplier said. In late July Hong Kong imposed a 14-day mandatory quarantine for crew members of ships calling at its port solely for bunkering purposes since, leading suppliers to cut down on cargo procurement and halting some bunker operations. Market sources estimate China’s low sulfur fuel oil production at around 850,000/month, and local suppliers continue to procure LSFO from overseas to meet any excess demand. China’s marine fuel market demand averages 1 million mt/month.
However, Chinese suppliers are increasingly cutting down on imports as prices become more competitive at home. “We stopped importing bunker fuel about three or four months ago,” one Zhoushan-based supplier said. “Our fuel is now completely sourced from domestic refineries as prices are better”…
