China’s March marine fuel exports slide as anti-COVID rules bite

BEIJING : China’s exports of marine fuel in March plunged 15 per cent from a year ago, customs data showed on Wednesday, owing to high prices and anti-COVID restrictions at Chinese ports.

March shipments were 1.42 million tonnes, data from the General Administration of Customs showed. Most of this was very low-sulphur fuel oil (VLSFO), which has a maximum sulphur content of 0.5 per cent to comply with emission rules set by the International Maritime Organisation.

The volume was up from 1.31 million tonnes in February but was lower than 1.68 million tonnes in March 2021.

Exports of marine fuel in the first quarter of 2022 reached 5.06 million tonnes, up 7.7 per cent from a year before.

Average VLSFO prices at China’s bunker hub Zhoushan port were $886 a tonne in March, compared to $829 a tonne in Singapore, making Chinese fuel less competitive than its Asian rival.

Wednesday’s customs data also showed that 975,892 tonnes of fuel oil, including both high-sulphur and low-sulphur products, were brought into bonded storage in March, up 4 per cent year-on-year.

Analysts from China-based consultancy Longzhong estimated bonded VLSFO consumption at 4.32 million tonnes in the first quarter of 2022, up 2.8 per cent from a year ago but down 8.7 per cent from the fourth quarter in 2021.

Beijing’s stringent anti-COVID measures have forced shipping firms to cancel calls at Chinese ports, and discouraged international vessels from refueling there to avoid the severe port congestion caused by the disruptions to cargo handling.

But analysts expect consumption of marine fuel to increase in the April-June period, though the COVID restrictions will still weigh on demand in April.

Longzhong forecasts China’s VLSFO exports to hit about 4.8 million tonnes in the second quarter, with refiners continuing to crank up output to around 3.5 million tonnes.

The Chinese government issued a first batch of 2022 quotas permitting exports of 6.5 million tonnes VLSFO, up 30 per cent from the 5 million tonnes released in the same allotment of 2021.

Sinopec’s Zhongke refinery started 1 million tonnes a year of VLSFO production capacity in February and exported its first cargo of 17,000 tonnes in March.