China's VLSFO Exports Rose By a Third in April
China's low-sulphur marine fuel exports rose by a third in April compared with March to the highest level yet after it waived export taxes for domestic refiners to meet shipping demand, Chinese customs data showed.
Chinese refiners began exporting in January very low sulphur fuel oi (VLSFO) with a maximum sulphur content of 0.5% to comply with emission rules for ships from the International Maritime Organization.
Data from China's General Administration of Customs showed April exports of the ship fuel reached nearly 1.43 million tonnes, up from 1.07 million tonnes in March and just below a combined 1.56 million tonnes for the first two months.
Exports in the first four months reached just over 4 million tonnes, the data showed.
As the world's second largest economy, emerged from the coronavirus pandemic, China's exports of all goods rebounded, although global recession overshadows the demand recovery.
China, which has been striving to reduce its reliance on bunker fuel imports and create its own marine fuel hub to supply northern Asia, has not explained how it collects its marine fuel export data.
Beijing-based traders, speaking on condition of anonymity, said China records its bunker fuel exports by tracking Chinese refiners' bunker sales from bonded storage at major Chinese ports, such as Zhoushan and Qingdao in east China and Dalian in the northeast.
The average price of VLSFO in China was $234 in April, on a par with $236 in Singapore, Asia's bunker fuel hub, one of the traders said.
Analysts expect Chinese refiners to price their supplies at discount to Singapore to try to win a bigger share of the international market.
So far the impact is muted.
"Compared to Singapore, the competitively priced VLSFO among main Chinese ports might have attracted more business," Mia Geng, analyst at FGE in Singapore, said.
Beijing has allowed only four state refiners - Sinopec Group, CNPC, China National Offshore Oil Company (CNOOC) and Sinochem Group - as well as private refiner Zhejiang Petrochemical Corp (ZPC) to export VLSFO, managed under a quota system.
Chinese consultancy JLC Network Technology estimated these refiners produced 1.46 million tonnes of VLSFO in the first quarter.
As China's production grows, imports are expected to fall. Imports from countries such as Singapore and South Korea into China's bonded storages totaled 4.3 million tonnes in the first four months, down 10.7% from a year earlier, customs data showed.
Separately, China imported 470,000 tonnes of fuel oil under the "general trade" category, in the first four months, the data showed. The oil has been purchased by petrochemical plants as feedstock, traders said.
The table below shows China's fuel oil import and exports. Volumes are in tonnes.
|Exports||Bonded storage trade||Processing or tolling||Monthly total||Year-to-date|
|Imports||General trade||Bonded storage trade||Monthly total||Year-to-date|
(Reporting by Chen Aizhu and Muyu Xu; editing by Florence Tan and Barbara Lewis)