China is likely to import about 1.71-mil mt of fuel oil in August, down by 12% or 240,000mt from the estimate for July, C1 shipping schedule showed.
This will be the second month that China imports less than 2-mil mt of fuel oil, C1 data indicated. The exports for August are sharply down from a monthly average of 2.35-mil mt in the first six months of 2011, which was showed by data from the General Administration of Customs.
Chinese importers showed weaker interest in August-delivery straight-run fuel oil, as international crude hovered around US$110-120/mt in July and it was difficult to predict refineries' refining margins, C1 found.
Because of less demand, the CFR prices of M100 fuel oil cargoes fell by US$5/mt for delivery to China in August. The prices of other SRFO cargoes also fell, after drops in volumes.
In fact, as prices for delivery to Shandong were below expectation, Gunvor shipped two MR-sized cargoes of M100 fuel oil to Singapore in August, before blending and supplying them power plants in Pakistan.
Fuel oil imports from Venezuela are expected to drop to 320,000mt in August, down from 490,000mt in July.
Some Iranian 280CST fuel oil is scheduled to reach China this month, after long absence, with CFR premiums at about US$22/mt. Supply from the Middle East is not stable as this region has seen lingering supply shortage.
Meanwhile, two cargoes of Kazakhstan fuel oil are expected to arrive in China in August. The cargo that was booked early was traded with CFR premium above US$90/mt, but the one ordered in July was sold for less than US$85/mt of CFR premiums, said a source close to Kazakhstan's state-owned oil company KMG.
