Recently, the international geopolitical landscape has experienced repeated fluctuations. Coupled with scheduled maintenance at global refineries and disruptions to shipping logistics, the pace of international fuel oil production and exports has slowed significantly. Domestically, local fuel oil production capacity has been released steadily; however, demand has shown structural divergence, resulting in differing price trends between high-sulfur and low-sulfur varieties. From May 26 to 27, the domestic fuel oil spot market generally exhibited a pattern of high-level volatility. While cost support remains intact, short-term upward momentum is limited; nevertheless, in the medium to long term, the market retains upside potential, driven by international supply dynamics and demand during the peak season.
I. Spot Market Performance and Regional Prices (May 26–27)
As of May 27, the SunSirs benchmark spot price for fuel oil remained at a medium-to-high level for the year. On May 28, the SunSirs benchmark price stood at 6,067.50 RMB/ton—a decrease of 0.74% compared to the beginning of the month (6,112.50 RMB/ton).
Quotes across major domestic regions have diverged: in East China ports, the trading focus for low-sulfur fuel oil remained stable, while high-sulfur varieties showed slight weakness. In North and Northeast China, ex-factory prices at local refineries adjusted in line with market trends, keeping regional price spreads within a reasonable range. Overall spot market trading was driven primarily by immediate, essential demand; trader sentiment shifted toward a "wait-and-see" approach, with little willingness to restock at high prices. Consequently, spot quotes settled into a pattern where high-sulfur varieties were stable-to-weak, while low-sulfur varieties remained relatively firm. The circulation of supplies along the Yangtze River and within bonded zones remained smooth, with marine fuel sales proceeding on an "as-needed" basis and no signs of concentrated stockpiling.
II. Domestic Production Capacity and Supply Status
The overall scale of domestic fuel oil production capacity remains stable, with both major state-owned refineries and local refineries maintaining their standard production schedules. In May, the industry-wide operating rate remained at a neutral level; the scope of routine facility maintenance was limited, resulting in stable overall output. Domestic production of low-sulfur fuel oil has been released in an orderly manner, and the supply of bonded marine fuel has steadily rebounded, effectively meeting domestic shipping and blending requirements. High-sulfur fuel oil, conversely, relies more heavily on external imports for replenishment, with domestic output accounting for a relatively limited share; the overall market thus exhibits a structural characteristic of increasing self-sufficiency in low-sulfur varieties while remaining dependent on imports for high-sulfur varieties. III. International Production and Export Landscape
On the international front, persistent geopolitical instability in the Middle East—coupled with restrictions on navigation through the Strait of Hormuz—has led to a significant month-on-month decline in fuel oil shipments from the Persian Gulf region. Disruptions and shutdowns at select Russian refineries have resulted in a simultaneous decline in both fuel oil output and exports, further tightening the global supply of circulating cargo. Although increased supplies from North and South America have helped to partially offset these losses, they remain insufficient to fully compensate for the reduced volumes from the Middle East and Russia. Consequently, the overall global supply of fuel oil remains tight; with maritime freight rates remaining stubbornly high, the cost of imported cargo delivered to domestic ports continues to rise, thereby providing strong underlying support for domestic spot market prices.
IV. April Customs Import and Export Data (Year-on-Year)
According to customs data, domestic imports of high-sulfur fuel oil in April 2026 witnessed a marked decline on both a month-on-month and year-on-year basis. This contraction in external cargo arrivals was driven by rising import costs and waning feedstock demand from independent domestic refineries. Overall fuel oil exports also declined year-on-year, reflecting a strengthened domestic commitment to prioritizing domestic demand; however, exports of bonded marine fuel remained stable. For the January-to-April period, cumulative imports saw a slight year-on-year decrease, while total exports also contracted. This trend reflects a convergence in the fuel oil foreign trade landscape, resulting from the dual impact of weak demand from independent refineries and tight supplies in the international market.
V. Key Factors Influencing Price Fluctuations
Geopolitical disruptions on the international stage continue to bolster crude oil and feedstock prices, thereby establishing a firm floor for fuel oil production costs. Reduced fuel oil exports from the Middle East and Russia have tightened global supplies. Furthermore, with the approach of the summer peak seasons for power generation and maritime shipping, expectations for a rebound in downstream demand are on the rise, while persistently depleting overseas inventories have resulted in a scarcity of circulating spot market cargo.
Conversely, growing expectations for a de-escalation in negotiations between the U.S. and Iran have led to a gradual retreat in geopolitical risk premiums. Domestically, operating rates at independent refineries have declined, signaling a weakening in demand for refinery feedstock. The spot market is currently driven primarily by essential, immediate-use demand, lacking the momentum typically provided by concentrated inventory restocking efforts. Additionally, a slight accumulation of inventories in certain regions is acting as a ceiling, limiting the potential for short-term price appreciation.
VI. Market Analysis of Upstream and Downstream Products
In the upstream sector—where crude oil and residual oil serve as core feedstocks—international oil prices continue to fluctuate at elevated levels. Consequently, residual oil prices remain firm in tandem, thereby exerting sustained upward pressure on fuel oil production costs. Downstream sectors encompass marine shipping, refinery feedstock, and industrial power generation. Shipping demand is recovering steadily, while power generation demand is gradually picking up as summer approaches. However, demand for refinery feedstock remains weak, weighing on the consumption of high-sulfur fuel oil. Cost transmission across the entire industry chain is proceeding smoothly; yet, the divergence in end-market demand makes it difficult to drive a sustained, unilateral surge in prices.
VII. Market Outlook
In the short term—specifically during late May—fuel oil prices are expected to remain at elevated levels while fluctuating within a broad range. Given the volatility of geopolitical sentiment and the steady support provided by essential demand, there is insufficient momentum for a sharp short-term price rally; consequently, the market is expected to trade primarily within a defined range.
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