Asia Residual Fuels: Key Market Indicators for Sep 6-10

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The Asian residual fuel market in the Sept. 6-10 trading week is expected to see support as an arbitrage cargo inflow from the West stays relatively low in September, reports Platts.

Singapore’s residue stocks

Singapore’s residue stocks declined for the third consecutive week to 20.7 million barrels as of Sept. 1, the lowest level since the week ended Feb. 24, which also is expected to lend support.

Asian HSFO market

In the Asian high sulfur fuel oil market, demand is expected to weaken from the Middle East and South Asia for power utilities as the peak summer season was over, market sources said.

Marine fuel 0.5%S

Singapore’s bunker market

Singapore’s bunker market has been seeing the spread between the FOB Singapore marine fuel 0.5%S delivered bunker and the Singapore marine fuel 0.5%S ex-wharf bunker narrowing.

Differentials of Singapore-delivered marine fuel 0.5%S and the ex-wharf grade, also known as barging spreads, averaged $4.83/mt Sept. 1-3, down from August’s average of $5.06/mt, S&P Global Platts data showed. But the upcoming hectic shipping season in the fourth quarter should support premiums, traders said.

North Asian bunker market

The north Asian bunker market is expected to see sufficient supply at most major ports, but bunker premiums are likely to stay firm in line with Singapore cargoes. September term ex-wharf bunker premiums at Zhoushan and Hong Kong have both picked up on the back of strong cargo prices from Singapore.

In Zhoushan, ex-wharf marine fuel 0.5%S bunker for September was concluded at premiums of $2-$8/mt to Singapore marine fuel 0.5%S cargo assessments, up from traded levels in August of minus $2/mt to a $2/mt premium.

Hong Kong ex-wharf premiums were concluded at plus $25-$27/mt to FOB Singapore Marine Fuel 0.5%S assessments, largely higher than in August when they were concluded at plus $22-$27/mt, according to market sources.

Japan’s LSFO supply

Japanese refiners, traders and shipowners are beginning to negotiate semiannual term contracts from October to March for LSFO. Japan’s low sulfur bunker supply is sufficient so far in September, market sources said.

South Korea’s low sulfur bunker supply

South Korea’s low sulfur bunker supply is expected to tighten as SK Energy is going to cut production. South Korea’s marine fuel 0.5%S bunker premium to Singapore marine fuel 0.5%S cargo rose to $45.62/mt on Sept. 3, a near two-week high since Aug. 17 where it was assessed at $46.15/mt.

High sulfur fuel oil

Middle Eastern cargo

On the supply side, a Middle Eastern cargo on offer from Iraq’s State Organization for Marketing of Oil via a tender loading over the fourth quarter was released the previous week, due to close Sept. 9.

The quantity on offer, however, has declined due to SOMO signing a 1 million mt/year supply agreement with Lebanon, traders said, which has thus reduced the available quantity of high sulfur fuel oil on offer to the spot market.

Pakistan State Oil

Pakistan State Oil, which thus far has been an active buyer for August and first-half September cargoes, has also issued buy tenders for November-delivery HSFO and LSFO cargoes, according to market traders, although Middle East traders do not expect the company to award all the tenders.

“Their demand is waning given we’re now going past peak summer demand, so we’ll have to see whether they will award all the October and now November buy tenders,” said a trader based in Fujairah.

Fujairah’s bunker demand

Traders polled by Platts expected Fujairah’s bunker demand in August to outperform July’s sales volumes by 5% and 10%, while fixtures for September bunker deliveries have so far mirrored the robust demand seen in August.

Reflecting strong demand, heavy distillates stocks at the UAE’s Port of Fujairah fell for the third consecutive week to a five-month low of 8.245 million barrels in the week ended Aug. 30, down 5.1% on the week, showed latest Fujairah Oil Industry Zone data.

South Korea’s high sulfur bunker demand

South Korea’s high sulfur bunker demand is expected to pick up in September as its premium to Singapore-delivered bunker fuel narrowed to a nine-year low of $12.81/mt for August, with the fall in prices attributed to suppliers making determined offers to capture demand for HSFO.

Hong Kong HSFO market

Hong Kong is also likely to see supply tightness in the HSFO market on the back of strong demand from scrubber-fitted ships.

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Source: Platts

 

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