According to the Commodity Market Analysis System of SunSirs, the price of fuel oil 180CST in China fluctuated and declined in 2023. On January 1st, the mainstream price of 180CST fuel oil in China was 5,970 RMB/ton, while as of December 31st, the mainstream price in the market was around 5,418 RMB/ton, with an annual decline of 9.25%; Among them, the highest price for the year 2023 was around 6,246 RMB/ton on February 14th, and the lowest price was 4,868 RMB/ton on July 5th, with a maximum annual amplitude of 22.06%.
From early January to early February, the price of fuel oil 180CST continued to rise. Before and after the Spring Festival, the domestic ship fuel market experienced a shortage of raw material resources, leading to an increase in prices. The spot resources of 180CST were also tight, and the ship fuel market was actively pushing up. As a result, the price of ship oil continued to rise. From mid February to the end of June, the price of fuel oil 180CST dropped significantly. The price of mixed raw materials for ship fuel has dropped significantly, resulting in weak terminal demand in the ship supply market and limited replenishment capacity. The main demand for transactions is for essential needs, and overall transactions are light. The ship fuel market continues to decline. From July to September, the fuel oil 180CST continued to rise, leading to an increase in the international crude oil market. The cost of domestic ship fuel blending remained strong, coupled with tight supply of blending raw materials, resulting in a strong bullish sentiment in the market. As a result, the ship fuel market continued to rise. From October to December, the fuel oil price of 180CST fluctuated and consolidated, with increased winter transportation costs and strong domestic blending costs supporting the domestic ship fuel market; In the ship supply market, due to the impact of strong winds and cooling weather at the port, ship owners have limited transportation, resulting in an increase in freight rates. Ship oil suppliers are cautious in their operations, and market transactions are light, with small orders being the main demand.
In terms of cost, constrained by the ever-changing international situation and expectations of declining demand, the crude oil market in 2023 has also experienced ups and downs. Within the year, WTI crude oil prices fell by 8.46%, while Brent crude oil prices fell by 7.56%. The global crude oil supply will continue to shrink in 2024, mainly due to the OPEC+ policy of reducing crude oil production continuing until the end of 2024. In terms of demand, there is room for a sustained increase in global crude oil demand in 2024, mainly due to the stable recovery of the Asian economic situation. However, inflation rates in Europe and America are still high, so the international economic situation is still not optimistic. Therefore, it is expected that the average oil price in 2024 may be slightly higher than in 2023, but the increase will not be too significant.
Supply side:
In 2023, China's refining capacity reached a new high and has become the world's largest refining country, with a total crude oil processing capacity of approximately 984 million tons per year. In 2023, fuel oil production significantly increased. According to data from the National Bureau of Statistics, China's fuel oil production in 2023 was 53.647 million tons, a year-on-year increase of 5.8%.
In 2023, fuel oil production increased, and in 2024, there were still three companies with a total production capacity of 37 million tons per year. China's refining capacity continued to rise, but in the context of the implementation of the 14th Five Year Plan to reduce oil consumption and increase production, some outdated refining facilities will be integrated, which to a large extent controls the growth of refining supply; It is expected that fuel oil production will slightly increase in 2024.
Demand side:
According to data from the National Bureau of Statistics, the apparent consumption in 2023 was 62.1693 million tons, an increase of 37.89% year-on-year.
From the perspective of demand, in recent years, the demand for fuel oil has maintained a year-on-year growth trend, and the continuous and rapid development of the marine fuel oil market has become the main force in the growth of fuel oil consumption. The total consumption of marine oil accounts for nearly half of the total consumption of fuel oil. The Ministry of Transport has released national port cargo and container throughput data from January to November 2023. From January to November, the total cargo throughput of ports in China reached 15.51 billion tons, a year-on-year increase of 8.4%. Among them, the domestic trade cargo throughput reached 10.89 billion tons, a year-on-year increase of 7.9%, and the foreign trade cargo throughput reached 4.62 billion tons, a year-on-year increase of 9.6%; Completed a container throughput of 280 million TEUs, a year-on-year increase of 4.9%. According to the data released by the Ministry of Transport, the main ports in the five major port clusters achieved a positive growth in container throughput in the first 11 months of 2023. The overall fundamentals of the shipping market will not undergo significant changes in 2024, and it is expected that there will not be a significant increase in shipping demand. The shipping market may experience oversupply, and it is expected that there will be little change in fuel oil consumption in 2024.
Import and export:
According to data from the National Bureau of Statistics, China imported a total of 288.1918 million tons of fuel oil in 2023, a year-on-year increase of 116.2%; The total export volume of fuel oil in China was 19.9115 million tons, an increase of 6.7% year-on-year.
At the end of December 2023, the first batch of low sulfur fuel oil export quotas for 2024 were officially issued, totaling 8 million tons, which was the same as the first batch of export quotas in 2023. It is expected that the total amount of China's fuel oil export quotas in 2024 may be higher than in 2023.
2024 Fuel Oil 180CST Market Forecast
Overall, the international crude oil prices in 2024 will provide some cost support for the fuel oil market, and there may be some pressure on the supply and demand of the domestic fuel oil market. In addition, the consumption of marine oil has obvious seasonality. It is expected that the price of fuel oil 180CST in the domestic market will increase in 2024 due to the influence of stocking up during the Spring Festival in January and February, and the market will fluctuate downward during the off-season of demand from March to June. In July and October, it will fluctuate upward due to the influence of the consumption peak season. In November and December, it is mainly affected by rainy and snowy weather, and the overall price of fuel oil 180 in 2024 is expected to be slightly higher than the price level in 2023.
