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Hong Kong's 14-day quarantine rule seen shifting 10% of bunker demand to Zhoushan in August


Bunker fuel demand in Hong Kong is seen falling around 10% in August from July due to a new 14-day quarantine rule deterring ships from making bunker-only calls at the port, with the demand already seen shifting to China’s developing bunkering hub of Zhoushan and southern ports of Shekou and Xiamen, market sources said August 4.
 
Hong Kong’s Centre for Health Protection announced July 26 that cargo ships calling at Hong Kong for purposes other than loading or discharging cargoes would be subject to 14 days’ compulsory quarantine from July 29 as part of measures to curb the resurgent spread of coronavirus.
 
“The Hong Kong government did not say no to bunker-only calls to Hong Kong. Vessels can still come for bunkering only, but vessel crews have to be quarantined for 14 days and shipowners are not keen to do that,” a Hong Kong-based supplier said.
 
Market sources in Hong Kong said they have received requests for cancellations of bunkering stems from vessels that had planned bunker-only calls since the announcement.
 
“In July we were seeing a lot of bunker-only calls in Hong Kong. Many buyers called here mainly for crew changes. As a result, there was a congestion at South Lamma anchorage. With this new measure, bunker demand will likely decrease about 10% in August,” a second Hong Kong-based supplier said.
 
This demand has shifted to Zhoushan, Shekou and Xiamen, according to market participants.
 
“Buyers are considering Chinese ports as an alternative, in particular Zhoushan, because bunker prices there can sometimes be cheaper than in Singapore,” the second supplier added.
 
Hong Kong delivered marine fuel 0.5%S bunker was assessed at $340/mt August 3, while the same grade in Zhoushan and Singapore was assessed at $335/mt and $330/mt, respectively, S&P Global Platts data showed.
 
Low sulfur bunker fuel supply in Shekou and Xiamen has tightened as a result of the increase in demand, market participants said. “Bunker fuel prices are typically higher in Shekou and Xiamen and that is why most vessels prefer to call at Hong Kong for bunkering. Now they have no choice and so they are bunkering there,” a bunker trader in China said.
 
Platts does not assess low sulfur bunker fuel prices for Shekou and Xiamen, but market sources estimate that prices could be up to $10/mt higher than in Hong Kong.
 
This shift in demand is expected to continue until Hong Kong eases its quarantine measures, sources said.
 
“Most bunker suppliers in Hong Kong still have orders from container lines with cargo operations in Hong Kong, so the shortfall from bunker-only calls shouldn’t be too significant,” the first Hong Kong-based supplier said.
 
Source:Platts

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