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China's March marine fuel exports slide on COVID curbs

BEIJING : China's exports of marine fuel in March plunged 15 per cent from a year ago, customs data showed on Wednesday, hit by high prices and COVID-19 curbs at domestic 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), with a maximum sulphur content of 0.5 per cent, to meet the emission rules of 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 on the 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 of 2021.

Beijing's stringent COVID-19 curbs have forced shipping firms to cancel calls at Chinese ports, and deterred international vessels from refuelling there, to avoid the severe port congestion brought by disruptions of cargo handling.

But analysts expect consumption of marine fuel to increase in the April-June period, though the COVID-19 measures will still crimp 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 about 3.5 million tonnes.

China issued a first batch of 2022 quotas for exports of 6.5 million tonnes of VLSFO, up 30 per cent from the 5 million released in the corresponding 2021 allotment.

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.

The table below shows China's fuel oil imports and exports, all in metric tonnes.

The column of exports under bonded storage trade largely captures China's low-sulphur oil bunkering sales along its coast.

Exports Bonded y/y pct

storage

trade

January 2,329,677 40

February 1,314,684 -3.8

March 1,418,758 -15.5

Imports Ordinary Bonded Total y/y pct

Trade storage trade

January 202,456 620,707 823,163 7.2

February 317,825 547,894 865,720 -11.1

March 415,471 560,420 975,892 4.2

Source: Reuters

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