Asia Residual Fuels: Key Market Indicators For Feb 7-11

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Post-Lunar New Year demand is expected to bolster procurement and the sentiment for both very low sulfur fuel oil and high sulfur fuel oil bunker supply in the north Asia markets, bunker suppliers said.

Morning discussions saw for the ICE April Brent futures contract trading at $93.06/b at 0300 GMT Feb. 7, up $1/b from the 0430 GMT Feb. 4 level of $91.79/b, Intercontinental Exchange data showed, says an article published in Platts.

0.5%S marine fuel

The Singapore 0.5%S marine fuel balance-February/March spread was stable at $19/mt early-Feb. 7 from the Feb. 4 assessment, according to brokers’ discussions. The spread was bid at $18/mt against no offers in response, according to Intercontinental Exchange data.

Demand for low sulfur fuel oil bunkers in Singapore is set to pick up during the week after buyers had covered forward requirements for the Lunar New Year festive season since late-January, market sources said.

Steady demand for Fujairah-delivered marine fuel 0.5%S bunker is expected to tighten barge availability through late into the week, as bunker delivery lead times have stretched to at least 8-11 days compared with the typical three-four days, according to local bunker suppliers.

Amid ample VLSFO inventories at Fujairah and strengthening crude oil prices, the market expected some sellers to persistently offer the delivered grade at competitive rates to move oil cargoes, which had helped support demand at the port of Fujairah in January, traders said.

Similarly in north Asia, the bunker market is expected to see an uptick in demand as the China market resumes in the week of Feb. 7-11 after the Lunar New Year holidays.

In contrast, Japan’s spot bunker market is likely to weaken as traders rush to hit sales targets in a shorter month, as the end of the financial year approaches in March.

The market saw weak demand from Chinese ships in the first week of February, which also impelled some bunker traders to offer additional volumes in the spot market.

The Hong Kong marine fuel 0.5%S bunker market is set to continue its rise to catch up with the gains in the ex-wharf premium for February-loading bunker fuel.

February-loading Hong Kong ex-wharf marine fuel 0.5%S bunker premiums have settled at $33-$35/mt to FOB Singapore Marine Fuel 0.5%S assessments, higher than the premiums settled for January-loading cargoes at $25-$33/mt, Hong Kong-based bunker suppliers said.

High sulfur fuel oil

The Singapore 380 CST high sulfur fuel oil March/April spread narrowed early-Feb. 7 to $2.20/mt from the Feb. 4 assessment at $2.25/mt, according to ICE data.

The cash differentials of the 180 CST and 380 CST HSFO FOB Singapore assessments are expected to stabilize amid an influx of Russian-grade cutter stock cargoes, typically of 2.7% sulfur quality, to produce on-specification 3.5% sulfur HSFO, traders in Singapore said.

Japan’s high sulfur bunker supply is expected to remain tight as power utilities continue to consume it in February.

The premium of delivered Tokyo Bay 380 CST bunker fuel to Singapore 380 CST delivered bunker has been in the $90-$100/mt range since Jan. 24, while it averaged $84.64/mt in December 2021, S&P Global Platts data showed.

More sellers are expected to be able to service spot inquiries for prompt requirements of Singapore-delivered 380 CST HSFO since the week ended Feb. 5, whereas previously, the lack of readily available HSFO bunkers had stretched delivery lead times, according to traders.

Amid rising inventories, premiums of Fujairah ex-wharf 380 CST HSFO bunker fuel for February term contractual supply are expected to inch slightly below the $5-$10/mt premiums to the FOB Arab Gulf 180 CST HSFO cargo assessment inked the previous month, traders said.

Stockpiles of HSFO bunkers at the port of Colombo have dried up since the week ended Feb. 5 and they are expected to remain scarce throughout February, as Ceylon Petroleum had allocated the product for power generation purposes while Sri Lanka grapples with frequent breakdowns at a major coal-fired power plant, market sources said.

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Source: Platts

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