China Building Itself a Bunking Hub in Northeast Asia

The International Maritime Organization will cap global sulfur content in marine fuels at 0.5% starting January 1, 2020, from 3.5% currently. China believes that the IMO 2020 0.5% sulfur cap on marine fuels is an opportunity for China, and China would like to seize the opportunity. At present, around 90% of China’s bonded bunker sales were imported from other countries, mainly from Singapore and Malaysia. And China’s refineries do not produce bunker for the bonded bunker market. But China is building Zhoushan Port into a bunkering hub in Northeast Asia, and Sinopec has promised that Sinopec will supply compliant low sulfur bunker at major coastal ports in China from 2020 and even supply low sulfur bunker in Singapore and some other ports along the Belt and Road Initiatives. At present, China’s refineries are active to study the production of compliant low sulfur bunker, especially the refineries under Sinopec and PetroChina.

● On January 18, Sinopec Shanghai Petrochemical started low sulfur heavy bunker, becoming China’s first refinery to produce low sulfur bunker.

● On February 22, Sinopec Hainan Refining and Chemical produced 2,200 tons low sulfur bunker for the study of Shanghai Maritime University.

● On February 27, Sinopec Jinling Company produced compliant low sulfur bunker.

● On April 9, PetroChina Liaohe Petrochemical produced 4,500 tons low sulfur bunker for the bonded bunker market.

● On June 11, PetroChina Dalian Petrochemical produced 3,500 tons low sulfur bunker.

On June 5, Sinopec issued the low sulfur bunker supply planning in Zhoushan. According to the planning, Sinopec’s low sulfur bunker supply will reach 10 million tons in 2020 and reach over 15 million tons in 2023. In addition, a total of 10 refineries under Sinopec will have stable supply of low sulfur bunker in 2020.

China’s refineries mainly focus on two methods to produce low sulfur bunker. The first method is to process low sulfur crude oil. The second method is to use the low sulfur residual and slurry oil as main components to blend low sulfur bunker. Therefore, residual hydrogenation capacity and FCC units’ capacity will be important indicators to show whether China’s refineries will supply sufficient low sulfur bunker.

On May 5, Sinopec Jinling Company exported 8,000 tons low sulfur bunker to the bonded warehouse at Ningbo Port.

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