China's bonded bunker fuel oil consumption is predicted to edge up more than 2% year-on-year in the second half of 2024, boosted by tensions in Red Sea and robust demand in September and October, according to OilChem estimation.
The consumption of bonded bunker high-sulphur fuel oil (HSFO) and low-sulphur fuel oil (LSFO) is likely to maintain the uptrend in H2 2024, and the consumption for biofuel is projected to rise rapidly, serving as a new growth engine. The total consumption is estimated to reach 20.50 million tonnes in the whole year, up 4% year-on-year, when the consumption jumped 6% year on year (YoY) in the first half and surpassed 10.40 million tonnes, data from OilChem showed.
Driven by the robust consumption, the LSFO production might rise as well in the second half of 2024. Should the export quota of LSFO come at 3 million tonnes in H2 2024, the same figure as the same period last year, the production of LSFO is projected to jump 18% YoY in the second half, totaling 15 million tonnes throughout 2024. If the export quotas reach 4 million tonnes, the production of LSFO is estimated to rise over 30% during the same period.
It should be noted that starting from May 15, 2024, visa-free policies will be implemented at cruise ports in certain cities for foreign tour groups organized by domestic travel agencies, which will allow foreign tour groups to enter China as whole groups without visas for stays of up to 15 days, which will lead to an increase in bonded bunker fuel oil consumption in the cruise tourism field, but the impact might be limited.
Looking back on the first half of 2024, both the export quotas and production of LSFO rose nearly 9%, with domestic refineries ramping up the production of LSFO in the face of poor refined oil profits. Sinopec's LSFO production rose 12% YoY, overtaking PetroChina to become the largest producer in China. PetroChina and CNOOC also saw an increase in LSFO production, up 1% and 56% YoY respectively.
China's Bonded Bunker Fuel Oil Consumption over 2022-2024
Source: OilChem
In terms of varieties, due to a plunge in the cost of installing desulphurization towers, the consumption of bonded bunker HSFO climbed, accounting for nearly 17% of the total consumption. Accordingly, the consumption of bonded bunker LSFO inched down, with the market share falling to about 77%.
China's Bonded Bunker Fuel Oil Consumption in Major Ports
Source: OilChem
Zhoushan Port remained the top one bonded bunker fuel oil fueling port in China in H1 2024, with the consumption of about 3.60 million tonnes, occupying 35% of the total, followed by Shanghai Port, with the market share rising to 20%. East China (excluding Shandong) was still China's main consumption area of bonded bunker fuel oil, with a market share of more than 50%.
Written by Catherine Sun, sss@oilchem.net
Edited by Aggie Hu, huchenying@mysteel.com