Fuel oil ICIS quotes Fuel oil in and as follows: Region Assessment name Type Freq Units Also Pubs Code FOB Singapore price for mixed/cracked FOB Singapore premium/discount for Singapore front-month swaps for Singapore forward month swaps for FOB South Korea price for mixed/cracked FOB Middle East price for mixed/cracked FOB Hong Kong price for mixed/cracked CFR South price for mixed/cracked CFR South premium/discount for CFR East price for mixed/cracked CFR East premium/discount for FOB Hong Kong price for mixed/cracked 380CST high sulphur fuel oil CFR South price for straight-run 180CST high sulphur fuel oil CFR South premium/discount for straight-run CFR East price for straight-run 180CST high sulphur fuel oil CFR East premium/discount for straightrun CFR South price for straight-run 280CST high sulphur fuel oil CFR South premium/discount for straight-run 280CST high sulphur fuel oil CFR South price for 180CST medium sulphur fuel oil CFR South premium/discount for 180CST medium sulphur fuel oil CFR East price for 180CST medium sulphur fuel oil CFR East premium/discount for 180CST medium sulphur fuel oil Average price for mixed/cracked South ex-terminal barge price for Huangpu ship-to-ship transfer price for Zhanjiang ex-terminal barge price for Huangpu ex-terminal barge price for high sulphur residue Dalian ex-terminal barge price for East ex-terminal barge price for 1
Shanghai ex-terminal barge price for Ningbo/Zhoushan ex-terminal barge price for Nantong ex-terminal barge price for East ex-terminal barge price for 180CST medium sulphur fuel oil East ex-terminal price for domestic low sulphur coking feedstock Shandong ex-terminal truck price for high sulphur residue Publications referenced above: 1. ICIS C1 Oil Market Report (daily) Methodology last updated: 28 March, 2014 Recent changes to this methodology Date Assessment Code Change To comment on any aspect of this methodology, or to propose changes, please click here. ICIS continuously develops, reviews and revises its methodologies in consultation with industry participants. Product specifications and trading terms and conditions used aim to reflect typical working practices prevalent in the industry. General methodology ICIS publishes market prices based on information continuously gathered from market participants about: spot transactions, spot bid and offer levels, contract price negotiations, prices of related commodities, and relevant freight costs. ICIS includes in its price generation process only information gathered up to the published market close time for each commodity and assessed period. ICIS does not make retrospective adjustments or changes to price quotations based on information subsequently received. ICIS regards all arm s-length transactions which meet its specification criteria as carrying equal weight. ICIS uses proprietary models where necessary to normalize data to the typical specifications for cargo size and date ranges given for each commodity. Some ICIS assessments are the product of calculation alone, for example in markets where insufficient market activity takes place to permit price assessment, or where a market habitually itself sets prices according to a formula. Such calculated assessments are noted as such in their detailed methodology specifications. ICIS endeavours to cross-check all the transaction information it gathers. ICIS will not use information for assessment purposes where such checks call into doubt the accuracy of the original information, or where a transaction appears to have occurred under circumstances that render it non-repeatable or otherwise markedly unusual. 2
ICIS publishes a number of types of market quotation: Spot Range assessments Published daily and weekly, these delineate the typically tradable range for a full working day or week. The range is normally established using verified typical transactions and standardized atypical transactions. In the event that no relevant transactions have occurred in the assessed period, ICIS will establish a range using bids and offers for typical spec material; and using established market relationships resulting from manufacturing economics, product linkages, freight and forward markets. Weekly range assessments are marked in some ICIS reports with a + to distinguish them from spot close assessments (see below). In the ICIS Fuel Oil report, on days with deals, the assessment will reflect deals alone. On days without deals, the assessment will reflect bids and offers alone and can use the correlation between the current month and the forward month. On days with only one deal, the assessment will reflect that deal as well as bids and offers. Instrument function: Provides overview of market activity over course of one day in the case of daily reports, or one week in the case of weekly reports. Width of range offers insight into current levels of market volatility. Variable range width means assessment trades off accuracy for inclusivity, and transparency is reduced vis-a-vis spot close assessment. Suitable for inclusion in averaging mechanisms and market analysis tools Spot Close assessments Published daily and weekly, these reflect the transactable market value of the assessed product at the close of business for the assessed period (daily or weekly). Assessments are nevertheless shown as a low-high range, indicating the space in which a transaction is deemed to have been possible at the specified time. This low-high is typically tighter than that shown in a Spot Range assessment. The assessment is established taking into account: typical, repeatable transactions at arm s length between non-affiliated market participants; standardized atypical transactions, where it is possible to derive a typical equivalent market value for a transaction which does not conform to standard specifications; bids and offers for typical spec material; movements in related markets. In the absence of reliable, confirmable market information for a specific commodity, ICIS reserves the right to compute changes in specific assessments based on established relationships derived from manufacturing economics, product linkages, freight, and forward markets. Weekly Spot Close assessments are marked in some ICIS reports with a * to distinguish them from Spot Range assessments (see above). Instrument function: Reflects most recent tradable market value with high transparency and high accuracy. Suitable for inclusion in averaging mechanisms and market analysis tools. Indexes In some markets, ICIS publishes volume-weighted averages known as indexes or indices of verified typical transactions over 3
specified periods, either daily or weekly. Inputs to an index are checked editorially for conformity to specification and statistical outliers are eliminated. See individual methodologies for details. Instrument function: An index is a mathematically derived indicator of typical traded value over a given period. Because it is an average, it should be noted that an index does not provide a currently transactable price indication it is inevitably historical in nature; and both accuracy and volatility may vary with quantity of inputs. Suitable for long-term market analysis. Contract Reference prices These are publicly announced, often single number, reference contract prices, agreed in multilateral negotiations and used as a base price for contractual sales of material by producers, typically between major producers and large end-users. ICIS publishes Contract Reference prices once confirmation is obtained of at least two agreements between recognised contract partners of significant size. Note that the date of publication can vary for each contract period depending on the speed of industry negotiations. Instrument function: Contract reference prices are used in some markets as the basis for monthly or quarterly contracts and form the basis further negotiations between producers and buyers on volume-related discounts. Contract price assessments Published weekly, these reflect the achievable base price for contractual sales of material by producers, either to onward distributors or direct to end-users. Prices, typically valid either for one month, or for three, are arrived at by negotiation between producers and buyers, and are updated by ICIS once confirmation is obtained of agreement between major producers and typical buyers of the size indicated in individual specifications. Note that most contract prices are agreed as a base from which discounts are given to individual buyers, and that the size of these discounts typically varies based on the volume purchased over the contract period by the buyer. In the event that market participants fail or decline to confirm outright contract price levels to ICIS, ICIS reserves the right to make its assessments of achievable contract prices based on established market relationships derived from manufacturing economics, product linkages, freight, and forward markets. Instrument function: Provides view of baseline for currently prevailing contract mechanisms, where these are statically determined that is, bilaterally negotiated contracts not based on automated averaging of spot market prices. Distribution indicators Published weekly for some markets, these reflect contract prices net of known discounts to typical-sized product distributors. See individual methodology statements for details. Instrument function: Provides additional insight into typical prices paid by buyers in statically determined (ie bilaterally negotiated contracts not based on averaged spot market prices). Margins Published in ICIS Margin Reports, margin prices reflect computed differentials between different products related through the 4
processing chain. Instrument function: Provides insight into supply chain economics and industry profitability. Theoretically determines scope of pricing further along processing chain. Note that market behaviour sometimes violates apparent margin economics. Suitable for in-depth market and industry analysis. Assessment Window Daily spot assessments are based on information gathered throughout working day to close of business every day: 1630 hours (Beijing time) Note that information received after the relevant close cannot be used for assessment purposes, nor can a correction be issued based on subsequently received information. Note that the domestic Chinese prices in the daily report are spot close assessments. Assessed Periods For ICIS takes into consideration spot cargoes loading or delivered between 15-30 days forward from publication date. domestic spot assessments are for spot cargoes loading or delivered between 3-12 days forward from publication date. Product quality Fuel oil, also known as heavy oil or residue, is a black-brown sticky flammable liquid fuel. It is one of the refined products from crude refining. It is mainly a fraction obtained from residue of petroleum distillation and petroleum cracking. Fuel oil usually has high non-hydrocarbon compounds, colloids and asphaltenes, medium viscosity, relatively low carbon residue and ash content. It generates large amount of heat when burning. With relatively high heating value and low corrosivity, fuel oil can be used as burning fuel for boilers. As flash point is quite high, fuel oil is fairly safe during usage and storing. Fuel oil is widely used as bunker boiler fuel, burning boiler fuel, metallurgical and industrial boiler fuel. It is applied in power generation, petrochemical, transportation, building and steel industries. Specifications for (south /international markets) Item M/C 180CST HSFO (south /International) Testing Method Density (15,kg/l) 0.985 ASTM D1298 Kinematic viscosity (50,CST) 180 ASTM D445 Ash on weight basis (m/m, %) 0.1 ASTM D482 Carbon residue (m/m, %) 14 ASTM D189 Pour point ( ) 24 ASTM D97 5
Water by distillation volume (V/V, %) 0.5 ASTM D95 Flash Point ( ) 66 ASTM D93 Sulphur (m/m, %) 3.5 ASTM D4294/D1552 Total existent mechanical impurities (m/m, %) 0.1 ASTM D4870 Vanadium (PPM) 150 ICP Silicon (PPM) 100 ICP Specifications for (east market) M/C 180CST HSFO Item Testing Method (east ) Density (15,kg/l) 0.991 ASTM D1298 Kinematic viscosity (50,CST) 180 ASTM D445 Water by distillation volume (V/V, %) 1.0 ASTM D95 Flash Point ( ) 66 ASTM D93 Sulphur (m/m, %) 3.0 ASTM D4294/D1552 Total potential sediment (m/m, %) 0.1 ASTM D4870 Ash on weight basis (m/m, %) 0.15 ASTM D482 Pour point ( ) 24 ASTM D97 Carbon residue (m/m, %) 14 ASTM D189 Vanadium (PPM) 300 ICP Specifications for mixed/cracked 380CST high sulphur fuel oil (international market) Item M/C 380CST HSFO (international) Testing Method Density (15,kg/l) 0.985 ASTM D1298 Kinematic viscosity (50,CST) 380 ASTM D445 Ash on weight basis (m/m, %) 0.15 ASTM D482 Carbon residue (m/m, %) 15 ASTM D189 Pour point ( ) 24 ASTM D97 Water by distillation volume (V/V, %) 0.5 ASTM D95 Flash Point ( ) 66 ASTM D93 Sulphur (m/m, %) 3.5 ASTM D4294/D1552 Total existent mechanical impurities (m/m, %) 0.15 ASTM D4870 Vanadium (PPM) 300 ICP Silicon (PPM) 100 ICP Specifications for straight-run 280CST high sulphur fuel oil Item SR 280CST HSFO Testing Method Density (15,kg/l) 0.97 ASTM D1298 6
Kinematic viscosity (50,CST) 280 ASTM D445 Ash on weight basis (m/m, %) 0.15 ASTM D482 Carbon residue (m/m, %) 15 ASTM D189 Water by distillation volume (V/V, %) 0.5 ASTM D95 Flash Point ( ) 66 ASTM D93 Pour point ( ) 25 ASTM D97 Sulphur (m/m, %) 3.5 ASTM D4294/D1552 Vanadium (PPM) 60 ICP Silicon (PPM) 30 ICP Specifications for straight-run Item SR 180CST HSFO Testing Method Density (15,kg/l) 0.97 ASTM D1298 Kinematic viscosity (50,CST) 180 ASTM D445 Ash on weight basis (m/m, %) 0.15 ASTM D482 Carbon residue (m/m, %) 15 ASTM D189 Water by distillation volume (V/V, %) 0.5 ASTM D95 Flash Point ( ) 70 ASTM D93 Pour point ( ) 24 ASTM D97 Sulphur (m/m, %) 3.5 ASTM D4294/D1552 Vanadium (PPM) 60 ICP Silicon (PPM) 30 ICP Specifications for 180CST medium sulphur fuel oil Item 180CST MSFO Testing Method Density (15,kg/l) 0.96 ASTM D1298 Kinematic viscosity (50,CST) 180 ASTM D445 Ash on weight basis (m/m, %) 0.1 ASTM D482 Carbon residue (m/m, %) 15 ASTM D189 Water by distillation volume (V/V, %) 0.5 ASTM D95 Flash Point ( ) 66 ASTM D93 Pour point ( ) 25 ASTM D97 Sulphur (m/m, %) 2.0 ASTM D4294/D1552 Vanadium (PPM) 60 ICP Silicon (PPM) 30 ICP Specifications for domestic blended low sulphur coking feedstock Item Domestic Blended LSHV 250 Testing Methods Density (15,kg/l) 0.98 ASTM D1298 Engler viscosity (100 ) 2000 ASTM D445 7
Ash on weight basis (m/m, %) 0.06 ASTM D482 Water by distillation volume (V/V, %) 2 ASTM D95 Flash point ( ) 130 ASTM D93 Pour point ( ) 45 ASTM D97 Sulphur (m/m, %) 0.55 ASTM D4294/D1552 Total potential sediment (m/m, %) 2.5 ASTM D4870 Specifications for high sulphur residue Item High sulphur residue Testing Methods Density (15,kg/l) 1.06 ASTM D1298 Engler viscosity (100 ) 25 ASTM D445 Ash on weight basis (m/m, %) 0.5 ASTM D482 Water by distillation volume (V/V, %) 2 ASTM D95 Flash point ( ) 80 ASTM D93 Pour point ( ) 45 ASTM D97 3.5 Sulphur (m/m, %) ASTM D4294/D1552 > 2.0 Total potential sediment (m/m, %) 2.5 ASTM D4870 Credit terms Typical credit terms of international trades for LC 90 days. Confirmed deals with differing credit terms will be factored into the assessment but will be adjusted to LC 90 days equivalent. Domestic trades require cash payment. Standard spot cargo size In the international market, Singapore assessments for mixed/cracked 180CST HSFO are typically 20,000 tonnes. FOB South Korea assessment for mixed/cracked 180CST HSFO is 30,000-40,000 tonnes. FOB Middle East assessment for mixed/cracked 180CST HSFO is typically 70,000-80,000 tonnes. FOB Hong Kong assessments for mixed/cracked 180CST HSFO and 380CST HSFO are 30,000-40,000 tonnes. CFR south assessments for mixed/cracked 180CST HSFO and straight-run 280CST HSFO are 70,000-80,000 tonnes. CFR south assessment for straight-run 180CST HSFO is 30,000-80,000 tonnes. CFR east assessments for mixed/cracked 180CST HSFO and straight-run180cst HSFO are typically 30,000-40,000 tonnes. MSFO 180CST spot cargoes can range in size from 30,000 tonnes to 50,000 tonnes. In the domestic Chinese market: 8
Mixed/cracked HSFO 180CST spot cargoes are typically 500-5,000 tonnes. Mixed/cracked HSFO 180CST (south, Huangpu, Zhanjiang, Dalian), HS residue (Huangpu): 1,000-5,000 tonnes. Mixed/cracked HSFO 180CST (east, Shanghai, Ningbo/Zhoushan, Nantong): 500-1,000 tonnes. MSFO 180CST (east ) spot cargoes can range in size between 5,000 tonnes and 20,000 tonnes. Domestic blended low sulphur coking feedstock, HS residue (Shandong): 1,000-5,000 tonnes. Contract Reference prices N/A Assessment basis Northeast prices cover Liaoning, Jilin and Heilongjiang. North prices cover Beijing, Tianjin, Hebei, Shanxi, Henan and Inner Mongolia. Northwest prices cover Xinjiang, Qinghai, Gansu, Ningxia and Shaanxi. Southwest prices cover Chongqing, Yunnan, Guizhou, Sichuan and Tibet. Central prices cover Jiangxi, Anhui, Hunan and Hubei South prices cover Guangdong, Guangxi, Fujian and Hainan. East prices cover Shanghai, Zhejiang and Jiangsu. Shandong prices cover Shandong province. Taxes Tax Code Product Import tax rate for 2014 Export tax rate 27101922 No. 5-7 fuel oil 1% 0% 2710192910 Wax oil 0% 0% 2710192920 Heavy gasoil - 0% 2710192990 Other gasoils and fuel oils 6% 0% Value added Tax (VAT): 17%; no export rebates Consumption Tax: yuan (CNY) 0.80 per liter, or CNY812/tonne low-sulphur residue in fuel oil is usually sold under the name of bituminous feedstock and we define it as "low-sulphur coker feedstock" in our assessment system. The consumption tax on such feedstock is zero in the assessment. 9
Exchange rate ICIS C1 adopts the exchange rate released by the People s Bank of on 10:00 (Beijing time) on each working day. The exchange rate is a mean of offers/bids at a specified time on a specific day. The exchange rate provided by ICIS C1 is only for reference purposes, which may be different from the exchange rate released by local banks or other financial institutions. 10