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China’s Sinopec aims to start commercial supply of low sulfur fuel oil end-Apr

China’s state-owned Sinopec is planning to start commercial supply of low sulfur fuel oil from around end-April to early-May this year in Eastern China ports including Shanghai, Zhoushan and along the Changjiang river, a company source said Tuesday.

The plan is to supply LSFO domestically, and gradually start LSFO bonded bunkering, according to a previous report by S&P Global Platts based on data from the company website. Planned volume for its initial supply could not be ascertained.

“Sales of bunker fuel at Eastern China comprised 60% of the country’s total bunker sales last year,” the source said.

China’s bonded bunker fuel demand was about 12 million mt in 2018.

The last of Sinopec’s refineries to produce LSFO will be in August-September this year, the source said.

Several sources with Sinopec refineries said previously that they have firmed up their plans to produce fuel oil to meet International Maritime Organization’s specifications.

Sinopec’s Shanghai Petrochemical was the first of its refineries to deliver LSFO in late-January, followed by Hainan Petrochemical, which produced LSFO in late-February.

“The LSFO [produced so far] was meant for clients who have concluded agreements with us for vessel testing purposes, not so much for commercial sales,” the source said.

Sinopec’s refineries are geared to reduce residual production and maximize the production of gasoline, gasoil, jet fuel and petrochemical products. “Majority of the cargoes are distillates, not much fuel oil,” the source said.

As a result, it was unlikely to make profit from producing LSFO in the short term.

The first batch of over 10,000 mt of 380 CST bunker fuel oil with 0.5% sulfur content was directly produced from the residual hydrotreater and distributed in the bonded zone to vessels plying international voyages for trial.

The second batch of 2,200 mt LSFO was a straight-run product sold to domestic vessels for trial at a discount to gasoil, the source added.

The IMO will cap global sulfur content in marine fuels at 0.5% starting January 1, 2020, from 3.5% currently. From January 1 this year, Beijing has imposed the 0.5% sulfur limit along China’s entire coastline for vessels sailing within 12 nautical miles from the coast.
Source: Platts

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