- Downstream Hi-5 spread narrowest since June
- China’s teapot refineries’ appetite limited
The Singapore ex-wharf 380 CST high sulfur fuel oil term contracts for December’s supply were mostly concluded at premiums of around $7-$13/mt against benchmark FOB Singapore 380 CST HSFO cargo values amid healthy supply, reports Platts.
HSFO ex-wharf levels fall from premiums
In comparison, HSFO ex-wharf barrels for November-loading were mostly signed at premiums around $8-$15/mt, with more deals contracted at $10/mt and above, according to traders.
“December’s [HSFO ex-wharf] levels fell from premiums ranging in teens for November’s cargoes… Last couple of months many players have stocks and are unwilling roll inventories, but also unable to garner adequate interest to sell off stocks,” a Singapore-based trader said, adding that the levels at which deals were signed in November were quite volatile.
More Russian HSFO barrels could find homes towards the second half of December as refinery maintenances have recently completed, industry sources said, though close to 500,000 mt of HSFO reportedly sourced from the Middle East and Venezuela could land around Singapore Straits in the first half of December.
“Overall Russian [HSFO] cargo arrivals for December may eventually turn out lesser, as their refineries were previously under maintenance and just restarted… So, unlikely that flows [towards Singapore] could be higher than November,” the trader said.
Geopolitical tensions in the Middle East and uncertainties in 2025 with regards to the US’s handling of sanctions also induced volatility to HSFO valuations, according to traders.
Platts, part of S&P Global Commodity Insights, assessed the Singapore 380 CST HSFO cargo cash differential to the Mean of Platts Singapore 380 CST HSFO assessments to average at $12.59/mt over Nov. 1-29, higher than $7.37/mt for October.
Hi-5 spread narrows, spot demand bumpy
On the back of a softening low sulfur fuel oil complex and relatively stable HSFO dynamics around Singapore hub, the spread between the two delivered grades, or known as Hi-5 spread, has narrowed progressively over past few weeks and lessened cost-savings for shipowners with scrubber-fitted vessels.
Despite narrower Hi-5 spread, market participants maintain a rather positive outlook for scrubber uptake in 2025, as return on investments are still deemed viable with some shipowners still preferring to procure the more readily available conventional fuels than alternative fuels.
“We are still steadily getting contracts [for scrubber orders] for 2025. Though there’s some worries about a narrower Hi-5 spread recently, owners are still unsure what’s the best alternative for conventional fuels,” a source from a shipbuilding company said.
The Platts-assessed Singapore-delivered marine fuel 0.5%S values against the corresponding 380 CST HSFO assessment, called the Hi-5 spread, narrowed to an over five-month low of $75/mt Nov. 28, down $3/mt down on the day. The spread was last assessed lower at $74/mt June 12, Commodity Insights data showed.
The downstream Hi-5 spread progressively crunched to average at $100.05/mt so far in November, down from the $108.77/mt in October and $146.57/mt in September, Commodity Insights data also showed.
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Source: Platts
