Demand for marine gasoil in China is expected to rise as the 0.5% sulfur limit is advanced and extended to all vessels within some of the country’s Emission Control Areas, or ECAs, industry sources said this week.
The current low sulfur marine gasoil market in China is small, due to higher prices compared to LSMGO in neighboring ports, sources said, with some estimating the demand to be only 2%-3% of total bunker fuel demand in China currently.
Shanghai LSMGO prices, averaged $780.52/mt in August, compared to $701.48/mt in South Korea and $678.95/mt in Hong Kong for the same period, according to data assessed by S&P Global Platts.
The market for LSMGO will grow as a result of the ECA regulations, which have been implemented ahead of schedule, sources said.
Huatai Insurance Agency & Consultant Service Ltd. said in a circular on August 31, that the Maritime Safety Administrations of Shanghai and Zhejiang had advanced the expected start date of 0.5%-sulfur bunkers in the Yangtze River Delta emission control areas to October 1, from the original scheduled start date of January 1, 2019.
This means that from October 1, any fuel change-over operation should be completed prior to the entry into or commenced after exit from the Yangtze River Delta ECA.
Huatai Insurance Agency & Consultant Service also serves as a correspondent for several protection and indemnity clubs.
According to the notice from the Shanghai MSA, the requirement applies to all ships which are navigating, berthing or operating in Shanghai port, excluding ships or crafts to be used for military or sporting purpose and fishing boats, Huatai said.
The Shanghai port is among the world’s largest ports in terms of throughput and accounts for about 20% of China’s total bunker fuel market.
China designated the Pearl River and Yangtze River Deltas, and Bohai-rim Waters as domestic ECAs as early as 2015 and has announced a gradual implementation of the requirements concerning emissions of air pollutants from ships.
Many of Chinese initiatives to curb pollutants from shipping come as part of its ‘blue sky defence’ action plan and ahead of the International Maritime Organization’s global sulfur limit rule for marine fuels.
The IMO rule will cap sulfur in marine fuels at 0.5% worldwide from January 1, 2020, down from 3.5% currently. This applies outside the designated emission control areas where the limit is already at 0.1%.