Recently, on Aoshan Island in Zhoushan, Zhejiang Province, a 300,000-ton oil tanker slowly berths at the dock, with oil loading arms ready for connection. At Xiushan Eastern Anchorage, a bunkering vessel operated by Oriental Tongzhou has pulled alongside a large bulk carrier. Black fuel hoses are taut between the two vessels, and bonded fuel oil is being pumped into the carrier’s bunker tanks. On the large screen of the “Zhoushan Offshore Digital Fuel Station”, yellow vessel icons flash and move across the nautical chart, representing ships receiving bunkering services.

Every ton of oil loaded, unloaded or bunkered by these vessels was for a long time priced with Singapore’s “Platts Price” as the benchmark. Today, market participants refer directly to the “Zhoushan Price” displayed on screens at the Zhejiang International Commodity Trading Center (hereinafter referred to as Zhejiang Commodities).

On June 21, 2021, the Shanghai Futures Exchange (SHFE) and Zhejiang Commodities jointly released the China Zhoushan Bonded Bunker Fuel Seller’s Quotation for Low-Sulfur Fuel Oil, benchmarked against the futures price of low-sulfur fuel oil. This marked China’s first RMB spot quotation mechanism built on futures pricing, giving birth to the index system known as the “Zhoushan Price”.

During a recent field investigation in Zhoushan, reporters from the Shanghai Securities News learned that after more than five years of development, the “Zhoushan Price” index has evolved into a quotation system covering seller quotations, buyer quotations, warehousing prices, available storage capacity and meteorological indices. It has ended the long-standing reliance of the bunker fuel market on international pricing benchmarks, strongly supporting the development of Zhoushan’s bunker fuel market and shipping industry, and helping boost China’s discourse power in global bulk commodity pricing.

From Passive Price-Following to Independent Quotation

At 3 p.m. on each trading day, upon the close of SHFE’s day session, the settlement price of low-sulfur fuel oil futures appears in the “Zhoushan Price” collection backend, and enterprises then submit their quotations. By 4 p.m., enterprise quotations are finalized, and the system automatically generates and releases the daily “Zhoushan Price”.

Wang Baibing, Deputy General Manager of Zhejiang Commodities, told reporters that before the launch of the “Zhoushan Price”, Zhoushan Port was China’s largest bunker fuel bunkering port. Nevertheless, local shipping and bunker supply enterprises had to adopt Singapore’s Platts Price for procurement and settlement, remaining in a state of passive price-following in the price formation mechanism. The sheer size of the market failed to translate into commensurate pricing influence, and the domestic bonded bunker fuel market saw a growing need for an indigenous pricing mechanism.

A relevant person in charge at Sinopec Zhejiang Zhoushan Petroleum Co., Ltd., a fuel supplier, shared the same sentiment. He said the old Zhoushan bunker fuel market mostly adopted a “case-by-case negotiation” model. Buyers would compare quotations from Japan, South Korea and Singapore, leaving fuel suppliers at a disadvantage during price talks. Negotiations dragged on for individual deals, resulting in low transaction efficiency and a lack of an open, unified reference benchmark.

On the buyer side, shipowners previously lacked a price schedule that truthfully reflected local supply and demand in Zhoushan. A representative from Dayang Shijia (Zhoushan) Youpin Co., Ltd. (Dayang Shijia) stated that when its distant-water fishing fleet refueled, there was no local anchor for inquiry and price comparison. They could only reference overseas market prices, limiting their bargaining room.

The release of the “Zhoushan Price” has reversed this situation. According to Wang Baibing, it is published earlier than Singapore’s Platts Price with better timeliness and serves as a strong guide for Zhoushan’s bonded bunker fuel market. Buyers and sellers conclude RMB spot transactions based on the “Zhoushan Price” via the formula of “futures price plus premium and discount”.

For local distant-water fishing enterprises in Zhoushan, RMB-denominated pricing under the “Zhoushan Price” brings more tangible benefits. Officials from Dayang Shijia explained that the fuel prices referenced by their fleet were previously denominated in US dollars. Cost fluctuated sharply with exchange rate swings. With RMB quotations now available, fuel procurement is directly denominated and settled in the local currency, delivering more stable cost expectations and simpler financial arrangements.

Gradual Improvement of the Quotation System

Built upon seller quotations, the “Zhoushan Price” system has expanded in recent years. Buyer quotations were launched in 2022. Drawing on Singapore’s experience, the POZZ (Price of Zhoushan Zone) system went online in 2023 to promote RMB-denominated trading in bonded bunker fuel. Buyer quotations for high-sulfur fuel oil were released in 2025.

The rollout of buyer quotations stands out as a key milestone, providing shipowners and fuel suppliers with a reference tool aligned with real-time local market conditions in Zhoushan during negotiations.

A representative of Dayang Shijia commented: “The ‘Zhoushan Price’ system provides a standardized pricing foundation based on actual supply and demand at domestic ports and better captures instant shifts in the local market.” For industries such as distant-water fishing and cold-chain transport, fuel accounts for a large share of operating costs. The benchmark helps stabilize expectations for fuel expenses.

Fuel suppliers also feel the benefits directly. A fuel oil sales specialist at Zhejiang Zhe Petroleum Marine Fuel Co., Ltd. said the “Zhoushan Price” draws on a broad sample of quotations and is linked to SHFE futures prices. When arranging procurement and fuel inventory, the company can reference both benchmarks to conduct hedging and contain price volatility within predictable bounds.

According to Wang Baibing, the number of bunker suppliers participating in “Zhoushan Price” seller quotations has expanded from the initial three to nine, covering central SOEs, local SOEs, private firms and foreign-controlled enterprises. Their combined bunkering volume accounts for more than 90% of Zhoushan’s total bonded bunker fuel supply, up from the initial 66%.

Wang Baibing noted that for buyer quotations, the first batch of participating international shipowners included six entities such as Hong Kong’s Haihong Shipping and Dalian Chun’an. The number has risen to 11, representing over 50 international shipowners across bulk commodity, dry bulk and distant-water fisheries shipping sectors.

Rising Bunkering Volume: Effective Futures-Spot Linkage

Since its launch in 2021, the “Zhoushan Price” has driven steady growth in bonded bunker fuel bunkering volume at Zhoushan. The volume exceeded 6 million tonnes in 2022 and hit 8.0271 million tonnes in 2025.

“Over the past five-plus years, the ‘Zhoushan Price’ has gained growing influence in China’s shipping and bunker supply markets. Zhoushan has maintained its position as China’s No.1 bunker bunkering port and become one of the top choices for international shipowners to take bunkers at anchorages,” Wang Baibing said.

Many interviewees believe that as the “Zhoushan Price” sees wider adoption for settlement in global bunker fuel trade, RMB usage in bunker fuel settlement will likely expand. Through cooperation between Zhejiang Commodities and SHFE, Zhoushan can not only safely and efficiently store and ship global cargoes, but also participate in worldwide bunker fuel trade using an RMB-denominated pricing benchmark.

It is understood that the successful application of the “Zhoushan Price” in bonded bunker fuel has created “Zhejiang experience” for building a regional pricing hub. Zhejiang Commodities has extended this model to more product categories, launched LNG (liquefied natural gas) quotations in its quotation zone, and compiled Zhejiang’s first LNG price index.

Since the start of this year, beyond the “Zhoushan Price” system, Zhejiang Commodities has extended its index-building capacity to more bulk commodities. It has successively rolled out a series of independent indices including the Zhejiang LNG Terminal Warehousing Index, Zhoushan Dry Bulk Comprehensive Warehousing Price, Primary Magnesium Ingot Spot Composite Price and Zhoushan Refined Oil Spot Price, covering energy, dry bulk, non-ferrous metals and refined oil.

As introduced by Wang Baibing, Zhejiang Commodities now hosts more than 3,750 member enterprises, forming a solid and active spot market base. In 2025, its trading turnover reached approximately 470 billion yuan, maintaining growth for consecutive years.

Source: Shanghai Securities News