Based on OilChem's data, China refineries' production of bonded low-sulphur fuel oil declined 8% month-on-month to 848,000 tonnes in November. And the extending production cuts for several months was largely attributed to the shortage of export quotas.
LSFO Export Quotas Usage over Jan-Nov 2023
Source: OilChem
As shown in the chart above that, China's refineries have used nearly 92% of low-sulphur fuel oil export quotas by now, and the production has accounted for more than 93% of export quotas. The production of PetroChina dropped drastically in November, due to the prominent shortfall of export quotas, and that of Sinopec, CNOOC and other enterprises all dwindled in November, because of weak downstream demand and poor production profit.
LSFO Monthly Production
Source: OilChem
LSFO Production and Prices
Source: OilChem
Compared with last month, although China's bonded bunker fuel prices went lower in November, affected by international crude oil price crash, low-sulphur fuel oil prices edged up, under the support of tight supply.
OilChem predicts that the ongoing lack of export quotas will be the biggest headwinds for low-sulfur fuel oil production, and the volume might slump to less than 700,000 tonnes in December, leading to a plunge in low-sulphur fuel oil production in 2023.
Written by Catherine Sun, sss@oilchem.net
Edited by Aggie Hu, huchenying@mysteel.com