Singapore’s bunker suppliers said on May 31 they were expecting to see a slight recovery in demand for low sulfur fuel oil in June, as Singapore’s delivered prices have fallen back below those in the Chinese port of Zhoushan since mid-May, reports Platts.
“The segment of dry bulk vessels and tankers running fixed routes would at least make up the base demand,” a Singapore-based trader said.
“However, oversupply [of marine fuel 0.5%] in China remains a concern,” he added.
High sulfur fuel oil demand from the Middle East has already picked up for June, with one of the region’s major buyers, Kuwait, seeking its first cargo in over a month to meet power generation demand, traders said.
Marine fuel 0.5% sulfur
- Discussions for June-July contango cargoes of Singapore Marine Fuel 0.5%S were rangebound May 31, with bids seen at minus $3/mt against offers at minus $2/mt, Intercontinental Exchange data showed.
- LSFO production by South Korean refineries was expected to increase in June, according to refinery sources there. “We will have to blend some of the light cycle oil into the VSLFO pool; it won’t cause a big increase, but our June-July production will still rise compared with May,” a South Korean refiner said.
- North Asian ports were expected to have sufficient supply on hand in June to meet demand, market sources said.
- In Japan, refiners and bunker traders expect supply to increase in June as the country’s largest bunker supplier ENEOS restarts operations at its Sendai and Kashima refineries.
- ENEOS’ Negishi refinery is also increasing LSFO production after fixing a technical glitch, market sources said.
- Supply at China’s Zhoushan port is expected to remain sufficient even though prices are no longer weak, bunker suppliers there said.
- Delivered Zhoushan prices have been higher than delivered Singapore prices since mid-May, and bunker suppliers and traders in Zhoushan were increasingly concerned about a loss of incremental demand to Singapore.
- The delivered Zhoushan price has been stable at a discount of $60-$65/mt to Singapore 10 ppm gasoil prices since mid-May.
High sulfur fuel oil
- Discussions for the June-July Singapore 380 CST high sulfur fuel oil spread opened May 31 trade in Asia up 5 cents from the May 28 assessment at minus $1.80/mt, according to ICE data and brokers.
- Demand from the Middle East for HSFO has received a boost from Kuwait Petroleum Corp. seeking an 80,000 mt cargo for June 15-21 delivery, according to traders in the region.
- This is the first cargo that KPC has sought since purchasing a similar cargo for delivery over May 9-15 to meet domestic power demand.
- Rising crude prices have again piqued North Asian refiners’ interest in using straight-run fuel oil as a cheaper feedstock, particularly in South Korea and China, sources at two refineries said.
- In Japan, high sulfur bunker has supply tightened in Tokyo Bay due to regular maintenance at Idemitsu Kosan’s Chiba refinery, bunker traders there said.
- Idemitsu Kosan shut the sole 190,000 b/d crude distillation unit at its Chiba refinery for scheduled maintenance on April 28. A company official declined comment on when the unit would restart.
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Source: Platts
