China is Singapore’s biggest bunker competition
News | Published Wednesday, July 21, 2021 10:19 AM
Reported by MARINE ONLINE
Singapore’s position as top bunker supplier is threatened by China’s competition
Shell Eastern was Singapore’s top marine fuel supplier in 2020 based on official data. This may be changed by China’s bunkering hotbed in Zhoushan, which houses some of the nation’s newest and biggest crude oil refineries.
China’s rapid expansion
The Chinese government smartly introduced tax incentives to make its fuels more competitive. Jayendu Krishna, Director at Drewry Maritime Advisors, said: “Singapore had an edge over other Asian ports on all parameters. However other ports have been gradually catching up. Zhoushan will certainly capture a share of the vessels from other north-east Asian ports.”
China’s bunker sales doubled the past five years and is banking on ships travelling to nearby ports in South Korea and Japan. Though Singapore is still a top supplier valued at over $30 billion in Asia, China’s growth is accelerating. Industry consultant OilChem estimates China’s sales rose for a fifth straight year to 16.9 million tonnes. SeaCred, a marine intelligence agency, valued the Asian bunker fuel market at between $31 billion and $32 billion in 2020. Singapore sold about 50 million tonnes of bunker fuels last year, or 20 per cent of the global total.
What are the odds?
The Chinese government is spending $80 million to expand the anchorage and build new shipping channels at Zhoushan. Refiners are producing higher volumes of low-sulphur fuel oil (LSFO), now essential under new global rules that mandates ships use cleaner fuels. “China’s bunkering business is closely catching up with Singapore’s,” Zhang Xiaoli, said in an industry conference last month. She predicted the nation’s marine fuel sales will be 40 per cent of Singapore’s in 2021, or about 20 million tonnes based on 2020 data. Zhou was formerly with the customs authority in Zhejiang province, which covers Zhoushan.
For one to make such a bold prediction, it confirms China is a step closer to world bunkering domination. The largest enabler to make its fuel prices enticing is state-funding, just like newbuildings. China issued over 10 bunkering licenses to companies operating in the free-trade zone of Zhoushan. It also introduced a LSFO futures contract to the Shanghai International Energy Exchange to improve transparency on pricing. The actual LSFO fuel being sold at the port was at $546/tonne in the week of 19 July 2021 - $3 higher than Singapore. This is after being cheaper in April 2021, data from the Marine Bunker Exchange revealed.
Marine Online Media Team
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