SIMIC

March shipments were 1.42 tonnes, data from the General Administration of Customs showed. Most of this was very low-sulphur fuel oil (VLSFO), which has a maximum sulphur content of 0.5 per cent to comply with emission rules set by the UN's International Maritime Organisation.

The volume was up from 1.31 million tonnes in February but was lower than 1.68 million tonnes in March 2021. Exports of marine fuel in the first quarter of 2022 reached 5.06 million tonnes, up 7.7 per cent from a year before. Average VLSFO prices at China's bunker hub Zhoushan port were US$886 a tonne in March, compared to $829 a tonne in Singapore, making Chinese fuel less competitive than its Asian rival.

Customs data also showed that 975,892 tonnes of fuel oil, including both high-sulphur and low-sulphur products, were brought into bonded storage in March, up four per cent year on year.

Analysts from China-based consultancy Longzhong estimated bonded VLSFO consumption at 4.32 million tonnes in the first quarter of 2022, up 2.8 per cent from a year ago but down 8.7 per cent from the fourth quarter in 2021.

Beijing's stringent Covid restrictions measures have forced shipping firms to cancel calls at Chinese ports, and discouraged international vessels from refueling there to avoid the severe port congestion caused by the disruptions to cargo handling.

Longzhong forecasts China's VLSFO exports to hit about 4.8 million tonnes in the second quarter, with refiners continuing to crank up output to around 3.5 million tonnes.

The Chinese government issued a first batch of 2022 quotas permitting exports of 6.5 million tonnes VLSFO, up 30 per cent from the five million tonnes released in the same allotment of 2021.

Sinopec's 600028.SS Zhongke refinery started one million tonnes a year of VLSFO production capacity in February and exported its first cargo of 17,000 tonnes in March.