Singapore:China’s oil storage and transportation company Sinochem-Xingzhong Oil Staging, or Zhoushan, has become the first in the eastern Zhejiang province’s free trade zone to produce fuel oil by blending two different imported oils, market sources said this week.
The fuel oil produced via blending meets wider specifications, including the 0.5% sulfur cap that will come into effect from 2020. From January 1, 2020, the International Maritime Organisation’s new sulfur limits will be implemented capping sulfur in marine fuels at 0.5% from 3.5% currently.
Prior to this, oil companies were only allowed to blend different grades of fuel oil from bonded storage in Zhoushan for sale as bonded bunker fuel or for export.
“With the relaxation of the blending restriction in Zhoushan, some oil blenders no longer need to blend outside China. Zhoushan can be an option,” a bunker trader in southern China said.
“They also have more options for raw materials, which will help them reduce the cost of blending and increase the competitiveness of their product,” the trader said.
The two grades of oil that were blended by Sinochem-Xingzhong were imported into bonded storage under two different harmonization system codes starting with 2715 and 2710, according to local media reports.
Sources suggested the two grades could be bitumen blend and diesel as the HS code for bitumen blend is 27150000, while diesel is 27101923.
The blending of two different grades of raw material helped lower the cost of Sinochem-Xingzhong’s fuel oil cargo by $1.50/mt, local media reported, citing the company.
