China’s growing bunker fuel market squeezes out N. Asian competitors
By Sourced Externally
June 18, 2021
Singapore, June 17 (Reuters) – China is reshaping global shipping fuel markets by taking advantage of its booming maritime trade and massive refining capacity to undercut rivals from Singapore to South Korea and become the world’s fastest-growing major marine fuel hub.
China’s rising influence in marine fuels, globally worth over $100 billion a year, has been made possible by a surge in its fuel output and thriving trade thanks to being home to the world’s largest manufacturing base and four of the five busiest global container ports.
That has allowed Chinese suppliers of marine fuel, also known as bunkers, to lure business with more competitive prices, chipping away at market share held by competitors such as Hong Kong, Taiwan, South Korea, Japan and Singapore.
“As the market stabilizes, China will start taking more bunkering growth volumes away from places like Singapore or other north Asian ports but this will happen gradually,” said Sri Paravaikkarasu, director for Asia oil at FGE.
In the first four months of 2021, China sold about 6.6 million tonnes of very low-sulphur fuel oil (VLSFO) with a maximum 0.5% sulphur content, which complies with global emission rules set by the International Maritime Organization (IMO), according to the latest customs data.
That’s up 62% from the 4.1 million tonnes sold over the same period last year.
Though that comparison is skewed somewhat by a pandemic-induced slump in activity in early 2020, the shift in refuelling patterns is clear.
For 2020 as a whole, China sold nearly 15.5 million tonnes of bunker fuel, the data showed, compared to about 12 to 14 million tonnes in 2019, according to industry sources.
Bunker sales in Zhoushan, China’s main bunkering hub, averaged some 400,000 tonnes per month in the first quarter of this year, and increased to about 450,000 tonnes per month lately, according to FGE analysts.
That rapid growth came after China, the world’s largest oil importer and no. 2 refiner, cut bunker fuel export taxes in early 2020 while granting producers VLSFO export quotas. This year, Asia’s top refiner Sinopec gave its refiners financial incentives to boost VLSFO supplies.