Shanghai bans private cars on roads to stem Covid surge
China's financial hub of Shanghai will ban all private vehicles on roads except for service cars from 13 April as part of Covid-19 prevention measures, a move that is likely to further cut Chinese transport fuel demand.
The measure is likely to prevent residents from trying to leave the city, especially as train tickets to major adjacent cities are sold out for the next five days after Shanghai announced that it will partly ease lockdown restrictions. This came after it divided areas in the city into three risk categories.
Cases from the city are spreading to multiple Chinese provinces, an official at China's National Health Commission said.
Chinese cities are struggling to contain the spread of the Omicron variant, leading to extended lockdowns and reductions in fuel demand. Gasoline demand is on course to contract by 170,000 b/d in March-April, Argus estimates, which would leave 2022 oil demand 90,000 b/d lower than expected.
Some Shanghai residents left the city even during a full lockdown from 1-11 April. A person who tested positive for Covid-19 moved freely within Weinan city in Shaanxi province after arriving from Shanghai on 11 April by hiding their travel history, local Weinan police reported. Weinan requires a two-week centralised isolation period for anyone arriving from cities with medium- to high-risk areas.
More than 73pc of the 374 cases from 10 March to 11 April in Suzhou city of Jiangsu province, some 80km from Shanghai by car, were transmitted from Shanghai, according to Gu Haidong, deputy mayor of Suzhou. Suzhou has completed a round Covid-19 testing for its 10mn residents. Suzhou is going through its most severe outbreak in the year with cases spreading in most districts, city authorities said on 13 April. A part of Kunshan, an industrial city in Suzhou with a population of over 2mn, has extended lockdown restrictions by a week to 19 April.
Shanghai reported 26,330 local infections on 12 April and city authorities estimate that case numbers will remain high for a while. China is trying to maintain strict Covid-19 restrictions in Shanghai because cases from the city account for over 87pc of total cases so far in April and infections in regions outside Shanghai are reducing or "mostly under control", an official at the National Health Commission said.
Residents from places in Shanghai with looser restrictions have been asked to avoid neighbourhood areas. Some areas allow one person from each family to go out once a day using temporary passes, mostly for food supplies.
Lockdowns and road closures during the month have significantly disrupted logistics despite China's state council warning that freight trucks should not be arbitrarily restricted from moving. Mail package volumes in Jiangsu have decreased by about 60pc in April and mail services might resume in 1-3 weeks, according to the Jiangsu provincial postal administration.
A trader in east China is concerned that the logistics disruptions will affect material and part deliveries to factories for their production lines, some of which run on diesel. This is likely to further weigh on diesel consumption. Diesel demand is on course to fall by 125,000 b/d in March-April as over 30 Chinese cities have been affected by lockdowns, Argus estimates.
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Brazil's Rio Grande do Sul reallocates gas supply
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Houston area refiners weather hurricane-force winds
Houston area refiners weather hurricane-force winds
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Texas barge collision shuts GIWW section: Correction
Texas barge collision shuts GIWW section: Correction
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Low-carbon methanol costly EU bunker option
Low-carbon methanol costly EU bunker option
New York, 16 May (Argus) — Ship owners are ordering new vessels equipped with methanol-burning capabilities, largely in response to tightening carbon emissions regulations in Europe. But despite the greenhouse gas (GHG) emissions savings that low-carbon methanol provides, it cannot currently compete on price with grey methanol or conventional marine fuels. Ship owners operate 33 methanol-fueled vessels today and have another 29 on order through the end of the year, according to vessel classification society DNV. All 62 vessels are oil and chemical tankers. DNV expects a total of 281 methanol-fueled vessels by 2028, of which 165 will be container ships, 19 bulk carrier and 14 car carrier vessels. Argus Consulting expects an even bigger build-out, with more than 300 methanol-fueled vessels by 2028. A methanol configured dual-fuel vessel has the option to burn conventional marine fuel or any type of methanol: grey or low-carbon. Grey methanol is made from natural gas or coal. Low-carbon methanol includes biomethanol, made of sustainable biomass, and e-methanol, produced by combining green hydrogen and captured carbon dioxide. The fuel-switching capabilities of the dual-fuel vessels provide ship owners with a natural price hedge. When methanol prices are lower than conventional bunkers the ship owner can burn methanol, and vice versa. Methanol, with its zero-sulphur emissions, is advantageous in emission control areas (ECAs), such as the US and Canadian territorial waters. In ECAs, the marine fuel sulphur content is capped at 0.1pc, and ship owners can burn methanol instead of 0.1pc sulphur maximum marine gasoil (MGO). In the US Gulf coast, the grey methanol discount to MGO was $23/t MGO-equivalent average in the first half of May. The grey methanol discount averaged $162/t MGOe for all of 2023. Starting this year, ship owners travelling within, in and out of European territorial waters are required to pay for 40pc of their CO2 emissions through the EU emissions trading system. Next year, ship owners will be required to pay for 70pc of their CO2 emissions. Separately, ship owners will have to reduce their vessels' lifecycle GHG intensities, starting in 2025 with a 2pc reduction and gradually increasing to 80pc by 2050, from a 2020 baseline. The penalty for exceeding the GHG emission intensity is set by the EU at €2,400/t ($2,596/t) of very low-sulplhur fuel oil equivalent. Even though these regulations apply to EU territorial waters, they affect ship owners travelling between the US and Europe. Despite the lack of sulphur emissions, grey methanol generates CO2. With CO2 marine fuel shipping regulations tightening, ship owners have turned their sights to low-carbon methanol. But US Gulf coast low-carbon methanol was priced at $2,317/t MGOe in the first half of May, nearly triple the outright price of MGO at $785/t. Factoring in the cost of 70pc of CO2 emissions and the GHG intensity penalty, the US Gulf coast MGO would rise to about $857/t. At this MGO level, the US Gulf coast low-carbon methanol would be 2.7 times the price of MGO. By comparison, grey methanol with added CO2 emissions cost would be around $962/t, or 1.1 times the price of MGO. To mitigate the high low-carbon methanol costs, some ship owners have been eyeing long-term agreements with suppliers to lock in product availabilities and cheaper prices available on the spot market. Danish container ship owner Maersk has lead the way, entering in low-carbon methanol production agreements in the US with Proman, Orsted, Carbon Sink, and SunGaas Renewables. These are slated to come on line in 2025-27. Global upcoming low-carbon methanol projects are expected to produce 16mn t by 2027, according to industry trade association the Methanol Institute, up from two years ago when the institute was tracking projects with total capacity of 8mn t by 2027. By Stefka Wechsler Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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