Asia Viewpoint: by Ma Dongwei

According to industry sources in China, the second batch of export quota for low sulfur fuel oil (LSFO) for 2022 amounting to 3.25 mil mt was released recently. Sinopec was allocated 1.81 mil mt, PetroChina 1.16 mil mt, China National Offshore Oil Corporation (CNOOC) 250,000mt, Sinochem 10,000mt and Zhejiang Petrochemical 20,000mt. So far this year, the quota for LSFO was 9.75 mil mt, up 21.9% from the previous year.

Chinese refineries produced 4.62 mil mt of LSFO during January to April, up 45% on year. Along with surging crude prices in 2022, prices of bonded LSFO also rose sharply. Refineries saw better margins and increased production.

As of end-April, some companies had used about 90% of their export quota. The second batch of export quota was released in early May, helping to ease the sense of supply tightness for export and ensuring stable production and supply of bonded LSFO.