In March, the Chinese marine fuel market saw a significant increase

March 31st News

According to the commodity analysis system, the marine fuel market in East China saw a significant increase in March. As of March 31, the average price of 180CST fuel oil in China was 6,587.50 CNY per ton, an increase of 21.43% from 5,425.00 CNY per ton on March 1.

In March, the price of China’s 180CST fuel oil saw a significant increase: The sharp fluctuations in the international crude oil market this month were the fundamental driver behind the rise in marine fuel prices. As of March 31, according to available information, the ex-warehouse low-sulfur quote for 180CST fuel oil in Dalian region was 6,700 CNY per ton, while the ex-warehouse low-sulfur quote for 120CST fuel oil was 6,800 CNY per ton. In the Shanghai region, the ex-warehouse low-sulfur quote for 180CST fuel oil was 6,700 CNY per ton, and the ex-warehouse low-sulfur quote for 120CST fuel oil was 6,800 CNY per ton.

In March, international crude oil prices surged dramatically, exhibiting a core market pattern throughout the month characterized by "a one-sided rally driven by geopolitical factors, followed by high-level volatility at month-end." Both WTI and Brent crude oil prices hit new phase highs, with cumulative price increases exceeding 40% for the entire month. The underlying logic behind this market movement was entirely dominated by geopolitical tensions in the Middle East: At the beginning of the month, the situation in the Middle East escalated sharply, causing traffic through the Strait of Hormuz to plummet to below 5% of normal levels. Oil-producing countries in the Gulf region, such as Iraq and Kuwait, were forced to significantly cut production due to disrupted exports and fully loaded storage facilities. Meanwhile, tankers were compelled to reroute around the Cape of Good Hope, driving up maritime shipping costs by 250% to 500%. Insurance premiums also soared, further boosting the landed cost of crude oil. Coupled with growing market panic over potential supply disruptions, these factors pushed crude oil prices higher. As the month progressed toward its end, however, as expectations of an easing of geopolitical tensions rose, some oil-producing countries resumed exports, and the U.S. announced the release of strategic petroleum reserves—negative factors that began to surface—the oil prices started to retreat from their historic highs and entered a period of high-level volatility by month-end.

Regarding international fuel oil, according to Singapore’s Enterprise Singapore (ESG): As of the week ending March 25, Singapore’s inventories rose by 4.71 million barrels, reaching a 10-week high of 24.509 million barrels; Singapore’s light distillate inventories increased by 5.04 million barrels, hitting a two-week high of 18.438 million barrels; and Singapore’s middle distillate inventories climbed by 1.227 million barrels, reaching a six-week high of 9.099 million barrels.

Market Forecast: Currently, international crude oil prices are on the rise, while the Chinese marine fuel market remains characterized by a strong wait-and-see sentiment. Terminal shipping demand is stable but subdued, and overall market demand for cargo transportation is moderate. Shipowners’ willingness to replenish fuel supplies is weak, with their primary motivation being urgent, essential needs rather than proactive stockpiling. At present, the ex-warehouse price for 180cst low-sulfur fuel oil stands at RMB 6,300–6,800 per ton, while the ex-warehouse price for 120cst low-sulfur fuel oil ranges from RMB 6,400 to RMB 6,900 per ton. Given that geopolitical tensions remain unresolved and the risk of navigation through the Strait of Hormuz has not been fully alleviated, the geopolitical premium is unlikely to dissipate quickly. Therefore, it is expected that the 180CST fuel oil market in April will likely experience volatile trading within a high-range band.