Sinopec’s tight bonded bunker quota likely to squeeze supplies
They account for about 65% of China’s LSFO production
China’s top low sulfur fuel oil producer Sinopec is likely to use up its export quotas for bonded bunkering in August says an article on SP Global.
Bonded bunkering
Sinopec China’s top low sulfur fuel oil producer is likely to use up its export quotas for bonded bunkering in August, which would lead to tight supplies at the country’s bonded bunkering ports until new allocations are issued
With an additional quota allocation in late May, Sinopec currently holds 4.45 million mt of quotas that allows the state-owned oil company to send its domestically produced tax-free LSFO to China’s ports for bonded bunkering.
Sinopec accounts for about 65% of China’s LSFO production, according to market sources. In the first half of 2021, it produced about 3.23 million mt of fuel, according to local information provider JLC.
Supply constraints
Due to the expectation of tightening inventories, offers for delivered marine fuel 0.5%S bunker fuel at the bonded bunkering hub of Zhoushan remained resilient despite the recent sluggishness in FOB Singapore marine fuel cargo valuations.
As Sinopec is likely to have fulfilled its bonded bunker export quota, easing of the oversupplied market at Zhoushan would shore up valuations of delivered marine fuel 0.5%S fuel and spur a diversion of demand to Singapore, industry sources said.
Platts data on July 8 also showed that the Zhoushan-delivered marine fuel 0.5%S was assessed at a $7.25/mt premium to the delivered grade in Singapore, the highest since May 27 when this differential spiked to $13.25/mt
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Source: SP Global
