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China’s Bonded Bunker Sales Fell in October, Sinopec Says

Nov. 16 (Bloomberg) -- China’s sales of tax-free ship fuel, known as bonded bunker, fell in October from a month earlier, according to an official at China Petroleum & Chemical Corp., the country’s largest oil refiner.

The nation’s total bonded-bunker sales may be more than 900,000 metric tons last month, down from about 1 million tons in September, Zhou Yiqing, the vice manager of the bunker department at China Petroleum, known as Sinopec, said in a telephone interview.

Bunker supply growth slowed as China, the world’s second-largest economy, contracted for a seventh quarter even as the nation’s exports rose more than estimated in October. Volume of the fuel rose about 21 percent last year from a year earlier, according to Shao Lei, a sales director at the fuel oil unit of PetroChina Co., the nation’s biggest oil company.

November volume should be similar to October, with no “sign of improvement,” Zhou said. China imports most of its bonded bunker, a residue product from crude refining.

The Chinese government is developing a plan to issue more licenses for bonded-bunker supply to open up the market, which is currently dominated by five Chinese companies.

“The authorities are still formulating the rules before granting more licenses,” Zhou said. “The rules, including a threshold on storage capacity, barge requirements and registered capital, may be released next year.”

Sinopec and BP Plc have expanded cooperation in bunker delivery to 10 Chinese ports under its joint-delivery contract signed last year, according to Zhou. “Joint supply volumes are rising steadily,” he said, without elaborating.

The two companies signed an agreement in August 2011 to work more closely in the global bunkering business. BP will distribute shipping fuel to the Chinese ports of Ningbo, Zhoushan, Shanghai, Lianyungang and Yantai in the east, Xiamen and Shenzhen in the south, and Tianjin in the north, Zhou said on June 26.

The spot price for 380-centistoke bunker in Singapore, the regional benchmark, has fallen 13 percent from $692.50 a ton on Sept. 17, a four-month high, according to data compiled by Bloomberg.

To contact the reporter on this story: Winnie Zhu in Singapore at wzhu4@bloomberg.net

To contact the editor responsible for this story: Alexander Kwiatkowski at akwiatkowsk2@bloomberg.net

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