China's bunker sales seen steady while trade soars

China's bunker sales volume is expected to remain steady in 2007 despite the growth in the country's foreign trade, which is mainly by sea, industry officials said on Tuesday.
Industry officials forecast bunker sales in China in 2007 would be 2.4 million to 2.5 million tonnes, in line with the usual annual volume of 2.5 to 3.0 million tonnes and the equivalent of the amount that Singapore, the world's largest bunker port, sees in a month.
"There is no incentive in China to sell fuel to the marine industry, and the marine industry has no incentive to buy fuel in the country either," said Soren Nielson, general manager of International Bunker Services K.K. based in Tokyo. China's bunker market is now dominated by state-owned China Marine Bunker Co Ltd (Chimbusco), a joint venture between PetroChina and Cosco Group.
Domestic demand for fuel oil from consumers such as power stations is so high that Chinese companies can get high prices from them. This also means bunker fuel in China costs shipping companies $10-$20 a tonne more than in Singapore. China's demand for overseas raw materials such as iron ore to feed its growing economy has been increasing in recent years.
"Although the government is taking efforts to cool down the economy, China's appetite will continue to grow in the next couple of years", said Shahzada Saleem Ahmed, managing director of Hua Dao Shipping (Far East) Limited. Ship owners and bunker company executives said that it was common for ships bound for China to buy bunker fuel when they passed by Singapore, and they would pick up some in China only when necessary.
Opening up the market to competition might shake up bunkering but industry officials said they did not expect the Chinese government to allow this soon. "On the one hand, the government realises bunker is big business. On the other hand, it does not want to have foreigners control it, because it is a form of energy", said Kenneth Cheung, chief representative of O.W. Bunker's Shanghai office.
"It is a dilemma for the government." Others said the bunkering industry was almost negligible on the agenda of the government of the world's biggest developing economy. "Bunkering is not a priority for the government. It has so many other things to do," said Nielson of International Bunker Services.