The sharp plunge in bunker sales in Hong Kong in 2020, a manifestation of the slump in demand worldwide for marine fuels as well as quarantine restrictions imposed in the city-port due to the global coronavirus pandemic, has boosted bunker sales at Zhoushan, industry sources told S&P Global Platts.

 

“Hong Kong has been badly hit. It is difficult here, so we have had to bunker at other ports such as Kaohsiung and Zhoushan,” a shipowner said.

 

The Hong Kong government last year announced that effective July 29, it was further restricting crew changes to curb the spread of COVID-19.

 

Ships calling there for bunkers only would not be exempted from COVID-19 lockdown measures, and would be required to be quarantined for 14 days before receiving fuel, it had said.

 

According to industry sources, this along with other hurdles, has resulted in Hong Kong’s bunker sales decline by some 30%-40% year on year in 2020. The current demand is roughly only about 400,000 mt/month, they said.

 

South Lamma is the major anchorage port for bunker-only-call ships, but now the business is gone, a bunker trader said.

 

Bunker-only-calls from ships in Hong Kong mostly come from bulk carriers and tankers. They are now mostly bunkering in Zhoushan as it falls en-route and is convenient for them to stop by there, he said.

 

Even lower bunker prices at Hong Kong could not stimulate demand. Hong Kong delivered 0.5% sulfur marine fuel averaged $355.16/mt in October-December 2020, Platts data showed, lower than the $381.64/mt average for the same grade at the Kaohsiung port during the same period and $363.36/mt at Zhoushan, according to Platts data.

 

“I receive only two to three enquiries per day. We no longer buy term from the oil majors; we buy spot ex-wharf for every enquiry,” a Hong Kong-based bunker supplier said, referring to the dismal demand situation in Hong Kong.

 

Adding to the woes, is the lull caused by the impending holiday season.

 

“The market is quiet. It is much worse than last month, possibly due to the upcoming Lunar New Year,” a second bunker supplier said.

 

Tackling challenges

 

Meanwhile, Hong Kong has taken some steps to mitigate the adverse situation.

 

“The emergence of the COVID-19 pandemic not only reshapes the way we live, it also disrupts the shipping industry on all fronts,” Frank Chan Fan, chairman of the Hong Kong Maritime and Port Board and Secretary for Transport and Housing, said in a speech in December.

 

On the maritime front, work continues to be in full swing despite the global turmoil, he said.

 

From April, a preferential tax regime for ship leasing businesses came into force. Qualifying ship lessors and ship leasing managers now enjoy 0% and 8.25% profit tax rates, respectively.

 

For marine insurance businesses, another piece of legislation was enacted to halve the profit tax rate from 16.5% to 8.25%.

 

Industry sources said that while these measures were positive, it would take some time for Hong Kong sales to recover, particularly at a time when Zhoushan was emerging as a fast-growing bunkering hub.

 

Zhoushan in spotlight

 

Zhoushan’s bunker market has expanded in recent years, with the port also warming up to new bunker suppliers such as Trafigura recently.

 

In 2020, the port of Zhoushan supplied 4.72 million mt of bonded bunker fuels, up 15.14% year on year, making it the eighth-largest bunker supplying port in the world, according to Zhoushan’s Bonded Bunker Fuel Association.

 

The port’s stellar performance came as international shipping dealt with numerous challenges due to the pandemic.

 

Radical local government schemes to improve industry efficiency, including the implementation of a nationwide rebate on value added tax for domestic produced fuel oil, a reduction in port fees and strengthening infrastructure has helped lift the port’s prospects, industry sources said.

 

Favorable pricing economics of bunker fuels at Zhoushan compared to some Asian ports also prompted many shipowners to bunker there, they added.

 

Zhoushan is also gearing up for continued robust sales in the coming years, with the port aiming to breach the 10 million mt mark in bunker fuel sales in 2025, according to documents released by the Zhoushan City Council and Zhejiang Provincial Government, Platts reported in January.

 

Source:Platts

Please Contact Us at：

media@xindemarine.com