Fewer arbitrage low sulfur fuel oil volumes are expected to arrive in Singapore in March, compared to February, according to initial estimates by traders, who attributed the widening backwardation to the tighter replenishment supply, says a Platts Market Insight article.
In contrast, a stock build in the high sulfur fuel oil market is expected to limit premiums in the Singapore ex-wharf 380CST market, bunker suppliers in the city-state said, although in the short-term, bunker premiums are expected to rise as receiving vessels arrive in Singapore in the week ended Feb. 18.
Morning discussions for the April ICE Brent futures contract were at $95.91/b at 0245 GMT Feb. 14, up nearly $4.50/b from the 0830 GMT Feb. 11 level of $91.46/b, Intercontinental Exchange data showed.
Marine Fuel 0.5%
The Singapore Marine Fuel 0.5%S March/April spread Feb. 14 rose to $19.50/mt from the Feb. 11 assessment of $19.05/mt, according to brokers’ discussions, with the spread bid at $19.25/mt against offers at $25/mt in response, according to Intercontinental Exchange data.
Initial estimates of March-arrival arbitrage LSFO volumes in Singapore are pegged lower than February arrivals of approximately 1.9-2 million mt, according to traders surveyed by Platts, represented by the $19.05/mt backwardation in the Singapore marine fuel 0.5% March/April market Feb. 11.
Buyers of Singapore ex-wharf marine fuel 0.5%S have mostly covered requirements for February amid moderate downstream demand, while cargo suppliers expect some volumes rolling into March inventories, according to market sources.
Distribution of the rising low sulfur fuel oil stockpiles is progressively balanced out across Singapore’s suppliers throughout the rest of February, as the market expects increasing availability for prompt bunker delivery, traders said.
A gradually tightening upstream VLSFO market at Fujairah is expected to support the delivered bunker premiums during the second-half of February, despite barge availability easing since the week started Feb. 14, according to local bunker suppliers.
In North Asia, supply tightness in the Hong Kong marine fuel 0.5%S market is expected to ease in the week of Feb. 14 after Sinopec’s cargo replenishment arrived on Feb. 10, market sources said.
The delivered Hong Kong marine fuel 0.5%S bunker premium to Singapore marine fuel 0.5%S cargo fell for four days in a row reflecting easing supply. The premium fell to $27.93/mt on Feb. 11, the lowest since Jan. 31, S&P Global Platts data showed.
In mainland China, Zhoushan is expected to see ample supply in the coming weeks as local production has been increasing, market sources said. Delivered Zhoushan marine fuel 0.5%S prices have been lower than Singapore since Feb. 9, according to Platts data.
High sulfur fuel oil
The Singapore 180CST high sulfur fuel oil March/April spread rose Feb. 14 to $1/mt from the Feb. 11 assessment of 50 cents/mt, according to Intercontinental Exchange data.
Singapore’s HSFO stock build is expected to cap premiums of the ex-wharf grade for term contractual supply in March, while February term contractual ex-wharf parcels were inked at $4.25-$5/mt premiums over the benchmark Singapore 380 CST HSFO cargo assessments, traders said.
More spot demand for Singapore-delivered 380 CST HSFO is anticipated between late-February and March, as arrivals of receiving vessels were delayed by port congestions around China amid the Lunar New Year festive season, according to sources from shipping companies.
Competitive offers for delivered HSFO bunkers at Fujairah is expected, due to ample inventories and healthy barge availability while demand has slowed from the previous month, bunker suppliers said.
High sulfur bunker is likely well supplied in North Asian ports except Japan, market sources said, with Japan’s high sulfur bunker supply expected to remain tight as the country’s largest refiner Eneos has suspended accepting fresh orders, a trader said.
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