Asia Residual Fuels: Key Market Indicators for Oct 4-8

Marine Fuel 0.5%

• The discussion level for the Singapore Marine Fuel 0.5%S balance-October/November spread was stable in mid-morning trade Oct. 4 from the Oct. 1 assessment at $1.50/mt, with offers at $3.75/mt against no bids.
• Ex-wharf premiums for Hong Kong 0.5%S marine fuel bunker for October-loading cargoes were concluded at $20-$25/mt to FOB Singapore Marine Fuel 0.5 %S assessments, slightly lower than for September, which were concluded at $25-$27/mt on ample supplies and average demand.
• South Korea’s marine fuel 0.5%S bunker supply is expected to tighten slightly in October due to refinery maintenance. SK Energy has scheduled maintenance at one of the 90,000 b/d residue desulfurization units at its 840,000 b/d Ulsan refinery for around 20 days, while Hyundai Oilbank has a 15-day turnaround scheduled at one of the 45,000 b/d RDUs at its Daesan refinery.
• Ex-wharf offers at Zhoushan have surged to premiums of $12-$13/mt to FOB Singapore Marine Fuel 0.5%S cargo as domestic supply in China tightens on the back of lower production of marine fuel 0.5%S due to refiners favoring more profitable gasoil production.
• Zhoushan and Shanghai are set for a quiet week as China celebrates Golden Week, with some barges halting operations for the holidays, traders said.
• China’s Oct. 1-7 holiday could dampen bunker demand; inquiries from China-bound vessels dipped Oct. 1.
• Amid high freight rates, shipowners were willing to pay more for delivered marine fuel 0.5%S at Zhoushan rather than deviating to Singapore unless the discount widened further, resulting in below-average demand in Singapore, industry sources said. “Bulk carriers are still skipping bunker-only calls in Singapore and bunkering at Zhoushan instead,” a Singapore-based bunker supplier said.
• The discount of Singapore-delivered marine fuel 0.5%S against the delivered grade at Zhoushan averaged $4.60/mt in the week ended Oct. 1 and $1.40/mt the week before, Platts data showed.

High sulfur fuel oil

• Discussions for the Singapore 380 CST HSFO November-December spread dipped to $5.75/mt in mid-morning Asia trade Oct. 4 from the assessment of $6.25/mt Oct. 1. Offers stood at $6/mt against no bids.
• Latest term contract supplies of Singapore ex-wharf 380 CST HSFO for October were concluded at $14-$18/mt over the FOB Singapore 380 CST HSFO cargo assessment, traders said, amid tight inventories and above the $10-$14/mt premium inked for term supply in September.
• Heavy distillates stocks fell 3.7% on the week to 6.724 million barrels, the lowest since December 2018, despite total oil product stocks rising 3.6% over the same period to 15.533 million barrels, Fujairah Oil Industry Zone data released Sept. 29 showed.
• Fujairah bunker sales concluded lower for September than August, with tepid demand for low sulfur fuel oil bunkers estimated to pare volumes down 5%, traders said.