According to the SunSirs Commodity Analysis System, the domestic marine fuel market in the East China region experienced a volatile downward trend throughout May. As of May 31, the average price of domestic 180CST fuel oil stood at 6,025.00 RMB/ton, marking a 1.43% decline from the price of 6,112.50 RMB/ton recorded on May 1.
The pricing trend for domestic 180CST fuel oil was characterized by volatile declines throughout May: In early May, the volatile downward movement in the international crude oil market provided limited support to the domestic marine fuel sector; coupled with falling prices for domestic blending feedstocks, the overall domestic marine fuel market trended downward. In mid-May, however, domestic blending feedstock prices rebounded. Furthermore, compliance inspections targeting the wholesale segment of the marine fuel supply chain were conducted across various domestic regions, leading to a tightening of tax-paid supplies and, consequently, an upward shift in domestic marine fuel market prices. By late May, prices for domestic marine fuel blending feedstocks once again trended downward; with insufficient cost support from raw materials, domestic marine fuel market prices retreated. According to SunSirs data, as of May 31, the ex-tank (self-pickup) quoted price for low-sulfur 180CST fuel oil ranged from 5,700 to 6,300 RMB/ton, while the ex-tank quoted price for low-sulfur 120CST fuel oil ranged from 5,800 to 6,400 RMB/ton.
The international crude oil market trended downward throughout May. The primary driver behind this shift was a rapid transition away from the previous "geopolitical conflict premium" toward a confluence of expectations for diplomatic de-escalation and bearish fundamental factors. The market was impacted by a quadruple combination of factors: signals regarding the resumption of talks between the U.S. and Iran, the partial restoration of shipping traffic through the Strait of Hormuz, the IEA's downward revision of supply and demand forecasts, and a massive surge in API crude oil inventories. Under the weight of these factors, the risk premium that had previously bolstered oil prices dissipated rapidly, resulting in a downward trend in crude oil market performance. Furthermore, weak global demand—coupled with concerns that an escalation of geopolitical conflicts could drag down economic growth and dampen oil consumption—contributed to a significant decline in the crude oil market. Regarding the international fuel oil market, data from Enterprise Singapore (ESG) indicates that for the week ending May 27: Singapore’s fuel oil inventories declined by 797,000 barrels to 20.703 million barrels; light distillate inventories fell by 260,000 barrels to 14.618 million barrels; and middle distillate inventories dropped by 62,000 barrels to 8.964 million barrels. Driven by a continued decline in Russian high-sulfur fuel oil exports—compounded by geopolitical disruptions in the Middle East and concentrated refinery maintenance schedules—the international high-sulfur fuel oil market is currently characterized by a phase of tight supply.
Market Outlook: The international crude oil market is currently trending downward amidst volatility, leading to heightened wait-and-see sentiment within the domestic marine fuel market. As wholesale inspections remain ongoing, the prevailing tightness in duty-paid fuel supplies is unlikely to ease in the short term. Furthermore, ahead of the peak summer electricity demand season, demand for coal and foreign trade shipping is expected to rise further, providing underlying support for fuel prices through increased end-user bunkering activity. Consequently, the market for 180 CST fuel oil is projected to trade within a high-level, volatile range in the near term.
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