Tight supply drives Zhoushan marine fuel 0.5%S premium to 6-month high
26th October 2020 07:58 GMT

The Zhoushan delivered marine fuel 0.5%S differential to benchmark FOB Singapore gasoil 10 ppm sulfur cargo assessments hit a six-month high at $13.76/mt Oct. 23 on tight supply, S&P Global Platts data showed.

The premium was last higher at $14.26/mt on April 22, Platts data showed

"Everyone don't have oil anymore, and barges are full," a Zhoushan-based supplier said.

China imports about half its bunker fuel requirements, with the other half met by domestic refiners, market sources said.

While domestic refiners have been ramping up production of low sulfur fuel oil for bonded bunkering since the tax rebate effective Feb. 1, their production volumes is capped by a quota.

China's Ministry of Commerce had issued a 10-million-mt LSFO export quota to five oil companies to limit the volume of tax-free domestically produced barrels for bonded bunkering at Chinese ports.

The companies are Sinopec, PetroChina, Sinochem, CNOOC and Zhejiang Petroleum & Chemical.

"It seems like production volumes are insufficient," the Zhoushan based supplier said.

In the first nine months of the year, Chinese refineries have produced over 5 million mt of LSFO, while demand of LSFO has risen from 1 million mt/month to about 1.3 million mt/month, market sources said.

Platts ,
26th October 2020 07:58 GMT