- PetroChina produced about 10,000 mt of ULSFO.
- Refuels 875 mt at about Platts’ LSMOG delivered Singapore minus $20/mt.
- H1 Singapore’s ULSFO bunker sales stand at 4,500 mt.
PetroChina has produced about 10,000 mt of ultra-low sulfur fuel oil and conducted the first refueling of this grade to a ship in China at Yangshan Port in Shanghai, sources familiar with the matter told Platts July 28.
This was an attempt by PetroChina and the Yangshan Port to explore a new business stream to meet potential demand for the 0.1%S fuel after the Mediterranean Emissions Control Area regulations took effect May 1, despite the challenges ahead, they added.
The refueling was conducted on July 24 by PetroChina Fuel Oil, bunkering 875 mt of the 0.1%S fuel oil to COSCO Shipping’s container ship COSCO PRIDE, Xinhua Agency reported.
PetroChina Fuel Oil is one of the oil giant PetroChina’s sales arms, while the ULSFO barrels were produced by PetroChina’s refineries.
The lot of ULSFO was supplied at a discount of about $20/mt against Platts’ low sulfur marine gasoil 0.1%S delivered Singapore assessment, a Shanghai-based market source said.
The new Emission Control Area regulations in the Mediterranean Sea have restricted the fuel sulfur cap to 0.1% since May 1, from the previous 0.5%, prompting the use of compliant fuels such as ULSFO.
The Chinese players estimated that over 17% of cruise ships and 24% of other fleets navigate in the Mediterranean, and expected the new regulations would generate about 4 million mt/year of demand for ULSMGO and ULSFO with sulfur content below 0.1%.
Located in one of China’s leading logistics hubs, the refueling indicated that Shanghai is able to provide ULSFO in addition to traditional fuel oil, biofuel, LNG and green methanol. The move laid a solid foundation for Shanghai to build a global shipping hub and service center, Xinhua reported, citing a local government official.
Thanks to the new regulation in the Mediterranean Sea, the ULSFO bunker and bio-blended ULSFO sale volumes in Rotterdam reached 250,565 mt, a five-year high, during the second quarter, up from 195,521 mt in Q1, Platts reported earlier.
Challenges from price, location
However, bunkering sources in eastern China said the price of ULSFO was less competitive than LSMGO. Moreover, China and even Singapore are not strategic locations for ULSFO bunkering compared to Turkey and Rotterdam.
“Need to divide a separate tank to store the fuel in a vessel, which is a kind of cost,” said a Zhoushan-based source, and he expected those ships that only travel to the Mediterranean Sea occasionally would prefer to burn 0.1%S ULSMGO.
The price of the PetroChina batch would be translated to $680.25/mt on July 24, taking into account Platts assessed 0.1%S LSMGO delivered Singapore at $700.25/mt.
In comparison, 0.1%S LSMGO was assessed at $697/mt, Shanghai delivered on July 24, and 380 CST bunker fuel stood at $425/mt on the same basis.
Around the world’s largest bunker hub of Singapore, any significant upswing in ULSFO demand has yet to be observed so far, though the ECA regulations piqued the interests of some cargo suppliers and blenders in Singapore before the enforcement kicked in on May 1.
“If ULSFO is much cheaper than low sulfur marine gasoil, and in order to save cost during time-charter negotiations, owners could be asked if the vessel is fit for use with ULSFO as an alternative to LSMGO,” according to a source from a shipping company, however, also stating supply constraints at some key hubs.
Across January through June this year, ULSFO bunker sales totaled only 4,500 mt, above the 2,500 mt across the whole of 2024, whereas no volume was recorded in 2021-2023, according to the latest preliminary data by the Maritime and Port Authority of Singapore.
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Source: Platts
