Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Singapore’s Grip on $30 Billion Oil Market Challenged by China

CommoditiesJul 20, 2021 06:09PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. Singapore’s Grip on $30 Billion Oil Market Challenged by China

(Bloomberg) -- Singapore is facing the greatest competition yet to its status as the dominant marine fuel supplier in Asia, with China luring more ships to its shores following a rapid expansion of its port and refining facilities.

China’s marine fuel sales -- known in the industry as bunkering -- have almost doubled over the past five years and the nation is banking on attracting ships that travel to nearby ports in major economies such as South Korea and Japan. Singapore still has a commanding position as the top supplier to a sector valued at over $30 billion in Asia, but Chinese growth is accelerating.

The epicenter of China’s bunkering is Zhoushan, an archipelago to the south of Shanghai on the east coast. Some of the nation’s newest and biggest crude oil refineries are being built in the area, while the government has introduced tax incentives that make Chinese fuels more competitive.

“Singapore has had an edge over other Asian ports on all parameters,” said Jayendu Krishna, director at Drewry Maritime Advisors. “It continues to be so today, however, slowly other ports have been trying to catch up. Zhoushan will certainly capture a share of the vessels from other north east Asian ports.”

Singapore -- also the world’s biggest ship refueling hub -- sold about 50 million tons of bunker fuels last year, or a fifth of the global total. Industry consultant OilChem estimates China’s sales rose for a fifth straight year to 16.9 million tons. SeaCred, a marine intelligence agency, valued the Asian bunker fuel market at $31 billion to $32 billion in 2020.

The world’s busiest ports are in China thanks to its massive manufacturing industry, and boosting its bunkering capabilities adds clout to supportive businesses. The local government is spending 520 million yuan ($80 million) to expand the anchorage and build new shipping channels at Zhoushan, while refiners are pumping out higher volumes of low-sulfur fuel oil, now essential under new global rules that mandates ships use cleaner fuels.

See also: Singapore Prepares to Swap Oil Hub Status for Greener Future

“China’s bunkering business is closely catching up with that of Singapore,” Zhang Xiaoli, a former official with the customs authority in Zhejiang province, which includes Zhoushan, told an industry conference last month. She predicted the nation’s marine fuel sales will be 40% of Singapore’s this year -- or about 20 million tons based on 2020 data.

China has issued more than 10 bunkering licenses to companies operating in the free-trade zone of Zhoushan, and has also introduced a low-sulfur fuel oil futures contract to the Shanghai International Energy Exchange to improve transparency on pricing. The actual LSFO fuel being sold at the port was at $546 a ton on Monday, $3 higher than Singapore, after being cheaper than the city-state in April, according to data from the Marine Bunker Exchange.

Zhoushan has been more competitive with its prices this year and Stena Bulk vessels traveling to China will likely utilize the port for refueling more often, said Yvonne Rittfeldt, head of bunker procurement at the shipping company, which transports crude and refined products. However, Singapore is more reliable with its efficient and timely delivery of fuel, she added.

Singapore has geographical superiority where it counts. It sits at the crossroads of a centuries-old trade route that links the region to Europe, the Middle East and the U.S. Gulf Coast. The construction of Southeast Asia’s first container port in 1972 helped the city-state map a path to the top marine fuel supplier spot, and it’s planning for the world’s biggest automated terminal.

Singapore has a vast refining and storage network to keep the steady stream of vessels refueled, and it’s also bolstered its credentials around transparency recently. Strict measures for monitoring bunker fuel deliveries were introduced last year, following on from the addition of flow meters in 2017, which gives shippers assurance the quantity of fuel they purchased will be delivered.

“The regional bunker fuel pie is big enough to support growth for key ports, but Singapore will remain the main bunkering hub in the foreseeable future,” said Victor Shum, vice president of energy consulting at IHS Markit.

©2021 Bloomberg L.P.

Singapore’s Grip on $30 Billion Oil Market Challenged by China
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email