China may double sales of bonded marine fuel to ships sailing overseas within two years, thanks to plentiful, low-cost supplies from Venezuela, a trader said.
Sales of the fuel will rise to as much as one million tonnes a month from the current 400,000 tonnes within a few years, and Chinese bunkering ports will become more competitive in Asia, said Kazuto Ishida, a fuel-oil trader at Hanwa Co, who spoke at a marine-fuel seminar in Tokyo yesterday. Bonded fuel is exempt from import duties since it is sold to vessels travelling overseas.
A 2005 energy agreement between China and Venezuela paved the way for Asia's largest fuel-oil importer to boost purchases from South America's largest oil producer. China fuel oil imports from Venezuela have more than quadrupled from 726,635 tonnes in 2004 to 3.23 million tonnes in 2007, while purchases from other nations such as South Korea and Singapore have plummeted, according to the National Administration of Customs.
PetroChina Co. imports between 900,000 tonnes and 1.5 million tonnes of the Venezuelan fuel into the Asian market, said a company official who declined to be named. The volume represents about 17 per cent of Asia's total bunker-fuel demand, of around six million tonnes a month, Mr Ishida said.
He added: 'The emergence of cheap Venezuelan fuel oil has completely changed the power balance among Asian ports.'
Venezuelan fuel oil cargoes are traded at a premium of around US$2 a tonne over Singapore fuel oil assessments published by oil-pricing service Platts at ports in southern China, according to Mr Ishida. This compares with fuel oil imported from Singapore which traded at a premium of around US$20 a tonne.
Before Venezuelan fuel became available, it was nearly impossible for bunker fuel suppliers in China and Hong Kong to compete with ports in Singapore, South Korea and Japan as Chinese suppliers largely depended on imports from those countries.
Since this year, the bunker price difference between Hong Kong and Singapore has occasionally reversed as Venezuelan fuel oil flowed into the Hong Kong bunker market, Bloomberg data showed. Typically, the Hong Kong bunker price stayed above the Singapore rate because of import costs.
'Shipowners, especially price-conscious European shipowners, are increasing bunkering at ports in China and Hong Kong,' said Mr Ishida.
Hanwa, which sources its supplies in China from PetroChina's bunker unit, better known as Chimbusco, sells about 80,000 tonnes of bunker fuel a month to overseas vessels calling at Chinese ports. It holds about 20 per cent of the Chinese bonded bunker market.
Mr Ishida expects bunker fuel demand, which has started falling as shipping lines cut services, to recover in two years.
'It might take some time to get back to the peak level we have seen this summer, but I believe demand can be restored to the level we have seen last year within two years,' he said.
He estimates that global bunker demand peaked at 15 million tonnes a month in the quarter ended September this year, up from an average of 13 million tonnes a month last year.
Bunker fuel sales in Singapore, the world's largest bunkering port, dropped 9.2 per cent to 2.86 million tonnes in September from an all-time high 3.15 million tonnes in August, according to the Maritime & Port Authority of Singapore.
Container traffic between Asia and the US will likely drop 8 per cent this year, the Transpacific Stabilisation Agreement said last month. Traffic is unlikely to recover before the second half of next year, the shipping group said.
Sales of the fuel will rise to as much as one million tonnes a month from the current 400,000 tonnes within a few years, and Chinese bunkering ports will become more competitive in Asia, said Kazuto Ishida, a fuel-oil trader at Hanwa Co, who spoke at a marine-fuel seminar in Tokyo yesterday. Bonded fuel is exempt from import duties since it is sold to vessels travelling overseas.
A 2005 energy agreement between China and Venezuela paved the way for Asia's largest fuel-oil importer to boost purchases from South America's largest oil producer. China fuel oil imports from Venezuela have more than quadrupled from 726,635 tonnes in 2004 to 3.23 million tonnes in 2007, while purchases from other nations such as South Korea and Singapore have plummeted, according to the National Administration of Customs.
PetroChina Co. imports between 900,000 tonnes and 1.5 million tonnes of the Venezuelan fuel into the Asian market, said a company official who declined to be named. The volume represents about 17 per cent of Asia's total bunker-fuel demand, of around six million tonnes a month, Mr Ishida said.
He added: 'The emergence of cheap Venezuelan fuel oil has completely changed the power balance among Asian ports.'
Venezuelan fuel oil cargoes are traded at a premium of around US$2 a tonne over Singapore fuel oil assessments published by oil-pricing service Platts at ports in southern China, according to Mr Ishida. This compares with fuel oil imported from Singapore which traded at a premium of around US$20 a tonne.
Before Venezuelan fuel became available, it was nearly impossible for bunker fuel suppliers in China and Hong Kong to compete with ports in Singapore, South Korea and Japan as Chinese suppliers largely depended on imports from those countries.
Since this year, the bunker price difference between Hong Kong and Singapore has occasionally reversed as Venezuelan fuel oil flowed into the Hong Kong bunker market, Bloomberg data showed. Typically, the Hong Kong bunker price stayed above the Singapore rate because of import costs.
'Shipowners, especially price-conscious European shipowners, are increasing bunkering at ports in China and Hong Kong,' said Mr Ishida.
Hanwa, which sources its supplies in China from PetroChina's bunker unit, better known as Chimbusco, sells about 80,000 tonnes of bunker fuel a month to overseas vessels calling at Chinese ports. It holds about 20 per cent of the Chinese bonded bunker market.
Mr Ishida expects bunker fuel demand, which has started falling as shipping lines cut services, to recover in two years.
'It might take some time to get back to the peak level we have seen this summer, but I believe demand can be restored to the level we have seen last year within two years,' he said.
He estimates that global bunker demand peaked at 15 million tonnes a month in the quarter ended September this year, up from an average of 13 million tonnes a month last year.
Bunker fuel sales in Singapore, the world's largest bunkering port, dropped 9.2 per cent to 2.86 million tonnes in September from an all-time high 3.15 million tonnes in August, according to the Maritime & Port Authority of Singapore.
Container traffic between Asia and the US will likely drop 8 per cent this year, the Transpacific Stabilisation Agreement said last month. Traffic is unlikely to recover before the second half of next year, the shipping group said.