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

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The Asian fuel oil market was expected to firm further over March 7-11 from the prevailing heady highs as the market pushes increasingly into trading for April-loading cargoes, says an article published in Platts.

The Asian low sulfur fuel oil market was particularly likely to firm further in the week as the near-term demand-supply balance pointed to less-than-ample availability of both finished grade product and low sulfur blending components.

The Asian high sulfur fuel oil market was also likely trend higher as the Russia-Ukraine conflict shows little sign of abatement — Russia is the single largest producer-exporter of fuel oil, the bulk of which finds its way into Europe.

Morning trades for the May ICE Brent futures contract were seen at $127.70/b at 0200 GMT March 7, up sharply from $111.14/b at the 0830 GMT Asian market close March 4, Intercontinental Exchange data showed.

Marine fuel 0.5%

The Singapore marine fuel 0.5% April-May swap was heard bid at $31.50/mt with no offers in sight in mid-morning Asian trade March 7, pushing even higher from the all-time high of $28.50/mt assessed March 4.

Downstream, Singapore-delivered marine fuel 0.5%S bunker demand was expected to be subdued amid the record high flat price environment, as most buyers limit volumes to a minimum of what is required only for the impending voyage, market sources said.

In the Middle Eastern port of Fujairah, rising freight rates for tankers were likely to impede the import of components for the LSFO blending pool, which could further tighten availability of finished grade marine fuel, UAE-based traders said.

Economic sanctions on Russia were expected to increase demand at North Asian ports in South Korea, Japan and China as Russian bunker suppliers may not be able to sell product at Far East Russian ports, which had hitherto seen demand of around 100,000 mt/month, traders said.

High sulfur fuel oil

The Singapore 380 CST HSFO April-May swap was pegged at $6.50/mt in mid-morning Asian trade March 7, up from $5.50/mt at the Asian close March 4, broking sources said.

Downstream end-user bunker fuel market was unlikely to see significant upside in the near term as participants at major Asian bunkering hubs reported adequate availability.

HSFO inventories in Singapore remain balanced against downstream demand, with adequate product availability for prompt bunker deliveries within a 5-day lead time, traders said.

Fujairah-based bunker suppliers also do not foresee major supply disruptions on account of current ample HSFO stockpiles.

In North Asia, apart from Japan where barge availability was said to be tight, traders at most other major bunkering hubs have reported ample availability of high sulfur bunker fuel.

However a shortage of HSFO bunker at Colombo port persists as Sri Lanka grapples with an acute fuel oil deficit, which has led to local refineries diverting product to power generation since early February, traders said.

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Source: Platts

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