- December’s ex-wharf contracts were concluded at premiums of $6-$10/mt, down from November’s $13-$17/mt.
- Ample LSFO cargo inflows from the West to the Far East and lagging downstream demand contributed to weaker fundamentals and cautious buying behavior.
- Upstream valuations dropped, with the cash differential for FOB Singapore Marine Fuel 0.5%S cargo hitting an eight-month low of 14 cents/mt on Dec. 10.
The marine fuel market in Singapore is experiencing a downward trend, as December-loading ex-wharf premiums for 0.5%S marine fuel barrels declined sharply compared to November. Traders attributed this to ample supply from steady LSFO cargo inflows and a tepid downstream bunker demand environment, which has left buyers hesitant to commit at higher premiums. Weak upstream valuations and reduced spot activity further illustrate the bearish sentiment impacting the market, reports SP Global.
Downstream and Upstream Market Dynamics
December premiums for LSFO ex-wharf contracts softened to $6-$10/mt, reflecting subdued demand and strong supply. November premiums were significantly higher at $13-$17/mt.
Downstream bunker demand has remained muted despite expectations of a seasonal uptick ahead of the year-end festive period. Sellers have been lowering offers to maintain competitiveness.
FOB Singapore Marine Fuel 0.5%S cargo valuations have weakened, with cash differentials hitting their lowest levels in eight months at 14 cents/mt on Dec. 10.
Supply and Demand Fundamentals
Continuous LSFO cargo inflows from the West since November have left Singapore well-supplied, while weaker-than-expected import demand from China slowed stockpile drawdowns.
The Platts-assessed Singapore-delivered Marine Fuel 0.5%S bunker premium averaged $13.32/mt over Dec. 1-10, a 14.32% decline from November’s average.
Despite subdued spot inquiries, some traders hope that baseline sales volumes under term contracts will sustain overall sales levels.
Market Outlook
Ex-wharf sellers signed quarterly contracts at high single-digit premiums, anticipating weaker demand ahead of the Lunar New Year season but expecting a gradual pickup post-holiday.
While some traders foresee continued bearish sentiment in the spot market, others are optimistic about January sales as buyers may prepare for the Lunar New Year early
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Source: SP Global
