China has been raising its marine fuel sales in recent years, aiming to grow its share of Asia’s large bunkering market, which is valued at more than US$30 billion and is dominated by Singapore, Bloomberg reports.
Singapore, the leader of the bunkering market, sold nearly 50 million tons of marine fuels in 2020, according to data on bunker sales in port from the Maritime and Port Authority of Singapore (MPA).
That’s around one-fifth of all bunker sales in the world for last year, according to Bloomberg.
China, for its part, is estimated to have sold just below 17 million tons of marine fuels last year, according to data from consultancy OilChem cited by Bloomberg.
China has been working for years to expand its shipping fuel sales, especially at Zhoushan, where authorities have issued licenses for bunker sales to more than ten companies operating in the free trade zone.
China has been trying to compete with Singapore with prices recently, but analysts still see Singapore as the undisputed leader in bunkering in Asia due to its established practices and the efficiency, speed, and reliability in the delivery of marine fuels.
“The regional bunker fuel pie is big enough to support growth for key ports, but Singapore will remain the main bunkering hub in the foreseeable future,” Victor Shum, vice president of energy consulting at IHS Markit, told Bloomberg.
China’s efforts to boost its position in the marine fuels market led it to launch low-sulfur fuel oil futures contracts on the Shanghai International Energy Exchange (INE). The move was aimed at improving the transparency on the pricing of low-sulfur fuel oil (LSFO).
In January 2021, Trafigura, Freepoint Commodities Singapore, and China-Base Resource completed the first cross-border take-delivery of low sulfur fuel oil (LSFO).
“It’s believed that the first physical delivery and cross-border take-delivery of LSFO show that domestic and overseas market participants are recognizing its pricing capacity and are tapping into the functions of this product,” INE said back then.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com