- Tight supply of low sulfur fuel oil in South Korea has caused refiners to hold off concluding term bunker fuel contracts for the fourth-quarter.
- While in Singapore light sulfur fuel oil demand fundamentals from the bunker market have stabilized, according to traders.
- Weakness in the low sulfur marine gasoil market is unlikely to result in dwindling demand for LSFO.
- With the number of marine gasoil barges serving as a limiting factor on LSMGO demand, they added.
Marine Fuel 0.5% Sulphur
The Singapore Marine Fuel 0.5%S November/December timespread was stable mid-morning Oct. 12, from the Oct. 9 assessment, at minus $1.65/mt, brokers’ indications showed.
Demand for low sulfur bunker fuel in Singapore is expected to remain largely stable, with the increase in inquiries for low sulfur marine gasoil seen at the start of the month tapering off, even as the spread between the two products remains narrow.
In the week ended Oct. 9, LSMGO averaged $5.60/mt higher than LSFO, narrowing from $8.20/mt in the week to Oct. 2, Platts data showed.
The Singapore-delivered Marine Fuel 0.5%S bunker premium to Singapore Marine Fuel 0.5%S cargo increased $2.05/mt to $16.55/mt on Oct. 9, from $14.50/mt on Oct. 2, Platts data showed.
In the North Asian market, poor demand and ample supply in Japan’s bunker fuel market is expected to weigh on differentials, with traders struggling to move volumes to meet their monthly quota.
Traders in Japan receive a fixed monthly volume quota under contracts with Japanese refineries.
Reflecting the weaker fundamentals, the Tokyo Bay delivered marine fuel 0.5%S differential to benchmark FOB Singapore 10 ppm sulfur gasoil cargo assessments fell $26.40/mt week on week to hit a one-month low of minus $11.66/mt on Oct. 9, Platts data showed.
In the South Korean market, refiners are holding back on term discussions for bunker supply contracts, according to traders, as spot market premiums have been trending higher.
Having flipped from a discount in September to a premium in October, after cutting supply by 50,000-100,000 mt of low sulfur fuel oil, market sources said.
HIgh Sulphur Fuel oil
According to brokers’ indications and ICE data, the Singapore 380 CST high sulfur fuel oil November/December timespread was stable at minus 85 cents/mt compared with the Oct. 9 assessment.
Asian high sulfur fuel oil supply is unlikely to increase as refiners continue to cut their run rates globally, traders said. The refiners have been cutting their operating rates due to weak demand for middle distillates, according to the sources.
Meanwhile, demand for Asian HSFO has declined as the summer peak season is over, traders said. While demand for high sulfur bunker fuel from scrubber-fitted ships is expected to rise, total demand is declining due to the drop in demand from the power sector, a trader said.
In the downstream bunker market, the availability of HSFO bunkering barges is limited in Singapore amid vessel delays following two recent typhoons in Japan and South Korea. At least two key HSFO bunker suppliers said the earliest they can make deliveries is from Oct. 20 onwards.
The Singapore-delivered 380 CST bunker premium to Singapore 380 CST HSFO cargo assessments declined $3.25/mt to $19.32/mt on Oct. 9 from $22.57/mt on Oct. 2, Platts data showed.
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Source: Platts
