Available LSFO storage for lease in Zhoushan in August shrinks 13% on month
2nd August 2022 16:48 GMT

 

Low sulfur fuel oil storage available for lease at China's biggest bunkering port of Zhoushan shrank 13.04% month on month to 680,000 cu m in August, marking the sharpest monthly decline across all oil products as overall tank utilization rates rose, the latest Zhejiang Mercantile Exchange data seen by S&P Global Commodity Insights showed Aug. 2.

 

Tank storage utilization rate for all oil products stood at 53.7% in August, 3.3 percentage points higher month on month, with 4.16 million cu m of storage available for lease as of Aug. 1, out of an overall capacity of 8.99 million cu m, the ZME data showed.

ZME, in collaboration with the Zhoushan Harbor Administration and Zhoushan Port Association, first made the data publicly available on its website on May 5. The data covers products such as crude oil, LSFO, gasoline, diesel, jet fuel, and naphtha inventories across 10 tank storage companies.

The available LSFO storage for lease hit a new low Aug. 1, since ZME first published the inventory data in May, which local traders said was in line with estimates of an inventory buildup at the port of Zhoushan.

Market participants polled by S&P Global also attributed the LSFO stock build to a relatively subdued bunker demand amid last month's disruptive weather conditions; and despite a pickup late-July due to competitive prices.

Moreover, ample bonded export quotas pushed China’s local refiners to raise LSFO production, which are sold in the delivered bunker market, according to market sources.

"There were not enough quotas for gasoil and gasoline, but there was enough for LSFO," a fuel oil trader said. "And the margins for LSFO were good."

Some bunker and fuel oil traders at Chinese companies attributed Zhoushan’s softening bunker market to lackluster demand, rather than rising LSFO supplies.

Bunker demand has been bearish partly due to the impending global recession, according to a fuel oil trader.

“More competition in China’s bunker market should be expected as refineries keep run rates elevated in July and possibly August, while downstream suppliers would also battle for market share,” a Zhoushan-based bunker supplier said.

The bunker supplier added that more buyers would opt to refuel LSFO at Zhoushan due to deeper discounts against delivered prices at the world’s largest bunker hub of Singapore.

Platts Zhoushan-delivered marine fuel 0.5%S bunker price spread against Singapore flipped to discounts to average at minus $15.60/mt in July from a premium of $6.36/mt in June, S&P Global data showed.

 

Zhoushan tank storage available for lease AugustJuly% changeCrude96106-9.43LSFO6878.2-13.04Gasoline4750-6.00Diesel102.2105.9-3.49Jet69690.00Naptha3437-8.11Total416.2446.1-6.70

Unit: '00000 cubic meters

Source: Zhejiang Merchantile Exchange


Bunkerworld ,
2nd August 2022 16:48 GMT