Discussions in the Singapore marine fuel 0.5% ex-wharf market for January parcels have begun to firm as cargo supply tightens, suppliers said Dec. 20. However, suppliers’ margins are capped by waning demand amid more competitive prices in North Asia, says a Platts Market Insight article.
The supply situation of high sulfur fuel oil in North Asia is contrasted by the tighter situation in China, due to fewer imported cargoes, and easing tightness in Japan, where bad weather has limited demand and lifted pressure on supply.
Morning discussions for the February ICE Brent futures contract were trading at $71.79/b at 0300 GMT Dec. 20, down from the 0830 GMT Dec. 17 level of $74.43/b, Intercontinental Exchange data showed.
Marine Fuel 0.5%
Discussions for the Singapore Marine Fuel 0.5%S January/February spread Dec. 20 stood at $15.75/mt, according to brokers indications, with the spread bid at $15.50/mt against an offer at $19/mt, according to Intercontinental Exchange data.
In North Asia, China’s Zhoushan bunker market is expected to see sufficient supply in the second half of December. With delivered Zhoushan marine fuel 0.5%S bunker prices lower than Singapore since mid-November, the market has attracted healthy demand, a bunker trader said.
South Korea is also likely to have ample supply as local refiners have raised its production. Poor demand for asphalt led South Korean refiners to shift to low sulfur fuel oil production from asphalt production, bunker traders said.
Supply tightness in Japan’s marine fuel 0.5%S market is easing as rough weather condition delayed ships’ arrivals and some loading schedules were postponed to January, a bunker trader said. Barge supply is likely to remain tight especially in West Japan.
Offers for the term contractual supply of ex-wharf marine fuel 0.5%S parcels in January have firmed up amid limited inventories of low sulfur fuel oil cargoes in Singapore, according to traders.
Waning bunker demand in Singapore for the rest of December is expected to crimp suppliers’ margins, market sources said, despite aspirations to prop up delivered marine fuel 0.5%S premiums while ex-wharf premiums stay supported to narrow the differentials.
Singapore suppliers are losing bunker demand to North Asian and European ports as the rising cost of ex-wharf continues to shore up Singapore-delivered marine fuel 0.5%S premiums, according to bunker suppliers.
Although low sulfur fuel oil barge availability in Fujairah has eased from the tightness experienced since the previous week, the reluctance to roll inventories into 2022 has fueled competition in the delivered market amid fueled suppliers’ eagerness to move oil cargoes before the year ends, traders said.
High sulfur fuel oil
Discussions for the December 380CST high sulfur fuel oil January/February spread were stable Dec. 20 at minus $0.50/mt compared with the Dec. 17 assessment at the same level, according to Intercontinental Exchange data.
The supply tightness in the Chinese high sulfur bunker will continue to persist as only limited cargoes were imported over December amid unstable demand, market sources said. The Chinese market has been short of HSFO bunker cargo since the start of the fourth quarter, according to bunker suppliers there.
In contrast, the supply tightness in Japan’s high sulfur bunker supply as well as the marine fuel 0.5%S grade supply is easing as a result of cancellation and delay of some bunkers deliveries caused by rough weather conditions, suppliers there said.
The Singapore market is experiencing a slowdown in demand for spot delivered HSFO bunkers amid a drop in overall volume of inquiries in December compared to the previous month, traders said.
Despite the sketchier stream of spot inquiries seen on a daily basis since December which largely attributed to a decline in shipping activity around Singapore, HSFO bunker sales is expected to stay consistent compared to previous months, bunker suppliers said.
Downstream competition has intensified at Middle Eastern port of Fujairah as the growing pool of HSFO bunker suppliers wrestle for market share, weighing on delivered HSFO bunker premiums while stockpiles remain ample, according to market sources.
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Source: Platts
