According to the S&P Global, Asia’s high sulfur fuel oil (HSFO) market is likely to receive moderate support next year, mainly from sustained bunker demand. However, abundant supply flows and rising competition from cleaner fuels are expected to restrain any sharp price gains.
Bunker demand remains a key pillar
HSFO consumption in Asia continues to benefit from the expanding fleet of scrubber-equipped vessels. As a result, bunker demand has stayed resilient, particularly at major hubs. Singapore, the world’s largest bunkering centre, remains central to this trend.
Between January and November, Singapore sold nearly 19.95 million tonnes of HSFO, representing an 8.7% year-on-year increase. Moreover, HSFO’s share of total bunker sales rose to 38.9%, up from 36.6% during the same period last year.
That said, growth has slowed. While HSFO demand surged by about 21% in 2024 and 19.5% in 2023, 2025 is shaping up to be the weakest expansion in recent years.
Supply pressure weighs on pricing
Although demand has improved, supply conditions remain heavy. Singapore continues to receive large volumes of replenishment cargoes from multiple origins. At times, these arrivals have exceeded bunker requirements, which has pressured cash differentials and calendar spreads.
Price indicators reflect this imbalance. The premium for delivered 380 CST HSFO bunkers in Singapore averaged $11.62 per tonne so far this year, almost half the $20.68 per tonne average recorded in 2024. Similarly, the cash differential for 380 CST HSFO cargoes has narrowed significantly compared with last year.
In addition, broader macroeconomic uncertainty continues to cloud the outlook. Tariff volatility, shifting trade routes, and fluctuating shipping activity are all contributing to uneven bunker demand patterns. As a result, seasonal trends may remain inconsistent into 2026.
Scrubber economics still supportive
Despite a narrowing price gap, the Hi-5 spread—the difference between low sulfur marine fuel and HSFO—continues to encourage scrubber use. In 2025, the spread has averaged around $75 per tonne, which remains sufficient to justify scrubber investments, especially as installation costs have declined since the early post-IMO 2020 period.
However, market participants expect scrubber uptake to slow gradually. At the same time, HSFO will face growing competition not only from low sulfur fuel oil but also from bio-blended fuels and other emerging alternatives.
China demand offers limited relief
Policy adjustments in China during 2025 provided some support to refining margins and feedstock demand. Even so, expectations for 2026 point to slightly softer Chinese appetite, as competition from Middle Eastern crude and sanctioned feedstocks intensifies.
While resales into China may ease supply pressure around Singapore, overall inventories are likely to remain ample. Consequently, these conditions should continue to cap major valuation upside for HSFO across Asia.
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Source: S&P Global
