BEIJING - China's clean marine fuel exports recovered in June, official data showed on Sunday, as countries made progress in containing the coronavirus and reopened their economies, boosting demand for international shipping.

Exports of the very low-sulphur fuel oil (VLSFO), with a maximum sulphur content of 0.5% to comply with emission rules set by the International Maritime Organization (IMO), rose 10.6% in June from May to 1.26 million tonnes.

For the first half of 2020, China shipped out a total of 6.5 million tonnes, data from the General Administration of Customs showed.

Imports of the clean marine fuel into bonded storage fell 16.8% in June versus May to 1.29 million tonnes.

Chinese refineries have expanded their production capacity of VLSFO amid Beijing's push to reduce its reliance on bunker fuel imports and to create its own marine fuel hub to supply northern Asia.

Analysts expect that China's total VLSFO capacity has reached 13.1 million tonnes, with 47.8% produced by Sinopec and 18.3% by China National Petroleum Corp (CNPC).

China began to export VLSFO in January after offering tax incentives to boost local production of the fuel, but only allowed four state refiners -- Sinopec, CNPC, CNOOC and Sinochem -- and private refiner Zhejiang Petrochemical Corp to export under a combined quota of 10 million tonnes.

"We expect Beijing to issue more VLSFO exports quotas in the second half of this year, which would buoy production incentives among refiners," analysts at China-based consultancy Longzhong Information said in a note last week.

"But the pandemic would be a potential obstacle to the VLSFO market while trade disputes would also cloud Chinese exports."

 

(Reporting by Muyu Xu and Pei Li; Editing by Sam Holmes) ((muyu.xu@thomsonreuters.com; +86 10 56692117;))