A bird's-eye view of the Ningbo-Zhoushan Port. [Photo/VCG]

Zhoushan has established a new benchmark in bonded fuel oil trading with the launch of the China Zhoushan Low Sulfur Fuel Oil Bonded Bunker Price (or Zhoushan Price) trading function on the POZZ system, developed by the Shanghai Futures Exchange and Zhejiang International Oil and Gas Trading Center.

This innovation allows buyers and sellers to directly transact within the system.

This development marks a milestone in the Zhejiang Free Trade Zone's comprehensive oil and gas reform efforts by not only introducing RMB-based pricing in the bonded low-sulfur marine fuel oil sector but also enhancing China's influence in the international energy market.

So far, the POZZ system has facilitated the transaction of 12,600 metric tons of spot goods, amounting to approximately 55 million yuan ($7.56 million).

The POZZ system, inspired by international index compilation practices, was developed around the bonded ship fuel industry in the Zhoushan area of the Zhejiang Free Trade Zone.

This year, the introduction of the trading function on the POZZ system enables bonded fuel supply companies and international shipowners to reach RMB spot transaction agreements based on the Zhoushan Price. This is China's first low-sulfur fuel oil pricing mechanism and serves to strengthen the linkage between the futures and spot markets.

For a long time, domestic bonded ship refueling markets relied on the Platts prices published in Singapore. This dependency was seen as a threat to the security of China's energy supply chain.

As policies in the Zhejiang Free Trade Zone evolved, the bonded fuel oil bunkering business at Ningbo-Zhoushan Port surged, making it the fourth-largest bonded fuel oil bunkering port globally. This growth highlighted the need for a domestic pricing mechanism, leading to the creation of the Zhoushan Price.