Mainland China's international bunker sales reached about 5mn t in the first quarter, up by about 500,000t from a year earlier, according to market sources.
February sales were slightly below 1.4mn t because of the lunar new year holiday, while volumes in January and March were each slightly above 1.8mn t.
International bunkering sales at east China's Shanghai-Ningbo-Zhoushan hub — or the Yangtze river delta hub — increased significantly to 2.9mn t in the first quarter from 2.6mn t in the first quarter of 2023, as prices in the hub were more competitive than that in other east Asian ports. Sales at the port of Ningbo-Zhoushan rose to 1.8mn t from 1.78mn t, while that at the port of Shanghai surged to 1.1mn t from 0.8mn t.
Zhoushan's very low-sulphur fuel oil (VLSFO) bunker price was lower than Singapore's for 43 of the 58 trading days that Argus reported in January-March. The Zhoushan VLSFO bunker price's discount to the Singapore bunker price averaged $8.20/t over January-March.
Low domestic VLSFO prices in February-March cut Zhoushan's VLSFO bunker prices, but the low prices also prompted domestic refineries to reduce VLSFO production given lower margins. China's domestic VLSFO supply fell to 4.1mn t in the first quarter, down by 650,000t from a year earlier.
The spread between Zhoushan's VLSFO bunkering price and Singapore's has narrowed and is now close to parity, as local refineries cut VLSFO production in April which boosted VLSFO prices during the month. But overall supply of domestic VLSFO in the second quarter will likely remain sufficient, given China's first batch of 8mn t of VLSFO export quota at the beginning of the year.
Limited barge capacity may weigh on VLSFO sales in the second quarter. The Ningbo-Zhoushan port is facing tight barge capacity because of stringent customs inspections, which may further intensify in May, according to market participants. The situation may weigh on bunker sales at Ningbo-Zhoushan port in the second quarter, but is also expected to boost Shanghai's bunker demand as vessels choose to bunker there instead of at the Ningbo-Zhoushan port.
