China’s daily average very low sulfur fuel oil (VLSFO) output rose by 3% month-on-month to 42,000 mt in May. This increase was primarily fueled by new VLSFO export quotas released by the Chinese government, encouraging refiners to ramp up production.
Government Quotas and Production Boost
In May, the Chinese government allocated 4 million mt of VLSFO export quotas for bonded bunkering in the second round of this year’s allocation. This policy move, along with unit restarts and improved profit margins, spurred refiners to increase their output.
Surge in Production by Major Refiners
Sinopec and PetroChina, two of China’s leading refiners, saw their daily VLSFO production rise to approximately 20,000 mt and 18,000 mt, respectively, both marking a 2% increase from the previous month. CNOOC also contributed to the overall production hike, enhancing the availability of bunker fuel.
Increased Availability in Zhoushan
The rise in VLSFO production has improved bunker fuel availability in Zhoushan, a key bunkering hub. Suppliers in the area now recommend lead times of 3-5 days for VLSFO orders, reflecting the enhanced supply and streamlined distribution processes.
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Source: ENGINE
