Thanks to improved demand in international shipping market, China's bonded bunker fuel consumption totaled 1.84 million tonnes in March, up approximately 460,000 tonnes, or 31% from last month and up 3% from a year ago, according to OilChem.
China Bonded Bunker Fuel Consumption
Source: OilChem
Correlation between China Bonded Bunker Fuel Prices, Crude Oil Prices, and Supply & Demand
Time |
Bonded Low-sulfur Fuel Oil and Crude Oil Prices |
Bonded High-sulfur Fuel Oil and Crude Oil Prices |
Price and Production |
Price and Consumption |
2020-2023 | 0.97 | 0.92 | 0.61 | -0.11 |
Sept-Dec, 2023 | 0.61 | 0.95 | -0.28 | 0.69 |
Jan-Mar, 2024 | -0.02 | 0.72 | -0.94 | -0.80 |
Source: OilChem
It can be seen from above table that, the correlation coefficient between prices of China's bonded low-sulfur fuel oil and international crude oil was extremely high over 2020-2023, while the figure was as low as only -0.02 since 2024. The production of low-sulfur fuel oil jumped significantly by 41% from last quarter, due to abundant low-sulfur fuel oil export quotas in the first quarter. However, the demand for bonded low-sulfur fuel oil was weak in end-user international shipping market, leading to oversupply. Based on OilChem's data, the average monthly price of bonded low-sulfur fuel oil stood at $622/t in March, down $4/t, or less than 1% month-on-month.
On the contrary, the correlation coefficient between prices of China's bonded high-sulfur fuel oil and international crude oil was 0.92 over 2020-2023, and reported 0.72 during the first quarter of 2024, which remained high. Buoyed by a rally in the demand for bonded high-sulfur fuel oil from China's independent refineries, the price gained momentum. OilChem's data showed the average monthly price of bonded high-sulfur fuel oil settled $466/t in March, up $25/t, or 5.67% month-on-month.
The price difference between bonded high and low sulfur fuel oil continued to narrow in March, with the monthly average price difference reaching $155/t, a month-on-month decrease of $29/t, or 15.76% from a month ago, data from OilChem showed.
Zhoushan Bonded Bunker Fuel Consumption
Source: OilChem
China Bonded Bunker Fuel Regional Consumption Structure in Mar
Source: OilChem
Zhoushan, Shanghai and Tianjin ranked the top three regions in terms of bonded bunker fuel consumption in March. The consumption in Zhoushan stood at 681,000 tonnes in March, an increase of 50.50% month-on-month and a year-on-year decrease of 1.43%, and that totaled 1.80 million tonnes over January-March 2024, a year-on-year increase of 2.74%. The proportion of Shanghai's bonded bunker fuel consumption also soared to 22% of the total, according to OilChem.
OilChem predicts the spread of bonded low-sulfur and high-sulfur fuel oil prices might continue to shrink in April, and China's bonded bunker fuel consumption would be set to sustain the upward path, supported by the smaller or even negative price difference of bonded bunker fuel between China and Singapore.
Written by Catherine Sun, sss@oilchem.net
Edited by Aggie Hu, huchenying@mysteel.com