- Demand tepid in Singapore amid regional competition.
- Fewer Red Sea voyages weigh on demand in Fujairah.
Weaker low sulfur fuel oil demand and ample stockpiles in the world’s largest bunker hub of Singapore due to competition from nearby alternative supply locations such as Malaysia and China have narrowed the grade’s spread against Fujairah in November, reports Platts.
Demand is thin overall
The price spread between the Platts-assessed Singapore-delivered marine fuel 0.5%S bunker price and the delivered grade in Fujairah was the narrowest in three months at $4/mt on Nov. 22, after weakening $6/mt on the day. The spread between the hubs was last weaker at $2/mt on Aug. 20. Platts is part of S&P Global Commodity Insights.
“Demand could be simply thin overall [in Singapore] if LSFO premiums continue to fall and any pickup in spot demand is not seen,” a Singapore-based trader said Nov. 25. “Though we have started receiving some spot January inquiries in the market over the last couple of days.”
Bunker suppliers said competition among downstream suppliers to capture deals has intensified over the past weeks amid limited spot inquiries despite initially stronger expectations for the fourth quarter ahead of the festive season.
Inventories are expected to be sufficient in the near term, with market sources anticipating replenishment inflows of LSFO arbitrage cargoes toward the Singapore hub in the last week of November and the first half of December.
Sluggish demand all week
The Singapore LSFO bunker premium to the benchmark FOB Singapore marine fuel 0.5%S cargo fell to an over four-month low of $11.83/mt on Nov. 22, down $1.79/mt on the day, according to Platts data. The premium was last lower at $11.33/mt on July 19.
Platts assessed the Singapore marine fuel 0.5%S cargo’s cash differential to the Mean of Platts Singapore marine fuel 0.5%S assessment at a three-month low of $4.21/mt on Nov. 22, declining 68 cents/mt day on day. The LSFO cash premium averaged $8.21/mt over Nov. 1-22, falling from an average of $8.55/mt in October.
In the Middle Eastern bunker hub of Fujairah, LSFO demand has slowed due to fewer voyages through the Red Sea due to an additional war-risk premium in the wake of the Israel-Iran war, traders said.
“Demand has been sluggish all week, except for better flows very late last week,” a Fujairah-based trader said, noting that very prompt LSFO barge availability is generally accessible.
Platts assessed the Fujairah-delivered marine fuel 0.5%S bunker premium to the benchmark FOB Singapore marine fuel 0.5%S cargo at a near 13-month low of $4/mt on Nov. 20, before it rebounded to $7.83/mt on Nov. 22.
Suppliers with forward ex-wharf LSFO requirements have been cautious about procurement activity for December barrels, as depressed delivered premiums threaten to narrow profit margins.
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Source: Platts
