China’s VLSFO production surged in January amid new quotas – JLC

The Chinese government’s release of new VLSFO export quotas spurred the refiners to bolster their VLSFO production. The refineries had trimmed VLSFO production in December due to a lack of export quotas.

Last month, the Chinese government allocated 8 million mt of VLSFO export quotas for bonded bunkering in the first round for 2024. The quotas were allocated to five major Chinese refiners, with a major chunk going to Sinopec and PetroChina, JLC data shows.

Sinopec’s daily VLSFO production surged to around 19,000 mt in January – more than a double from about 9,000 mt in December. PetroChina also boosted its VLSFO production in January.

Higher Chinese VLSFO production has resulted in increased bunker fuel availability in Zhoushan. Zhoushan’s VLSFO premium over Singapore peaked at $67/mt in December, but these premiums have nearly been erased now as Chinese refineries ramp up VLSFO production to meet their allocated export quotas.
Source: ENGINE, By Tuhin Roy