HSFO Bunker Fuel Continued Strong Demand


Singapore’s robust high-sulfur bunker fuel sales for April reflects continued strong demand for the grade in the world’s largest bunkering port, as ready product availability and bunker calls by scrubber-fitted ships keep HSFO consumption supported, despite a growing emphasis on cleaner fuels as decarbonization talks gain spotlight, reports platts.

Most Important Hub

“We believe Singapore will continue to be the most important hub in the world for the bunker industry and it has actually gained strength over the past year, mostly thanks to its reliability, its ecosystem and the competitiveness level that provides buyers with availability and good prices,” a bunker supplier said.

HSFO sales, which includes 180 CST, 380 CST and 500 CST bunker fuel, surged 41.4% year on year to 1.09 million mt in April and accounted for 25.62% of total sales, up from 18.75% a year earlier, latest data from the Maritime and Port Authority, or MPA, showed. High sulfur bunker fuel sales in April were also up 9.9% from March.

Sales Rose

Sales of 380 CST high sulfur bunker rose 52.7% year on year to 1.06 million mt in April, the highest monthly sales of the mainstay marine fuel since the International Maritime Organization’s global low sulfur mandate.

“Spot purchases for larger parcels of high sulfur bunker fuel on days when flat prices soften, could have supported the April sales figures reported by MPA. Moreover, the availability of barges also meant that shipowners could secure prompt delivery within one to three days ahead of laycan,” said a Singapore-based trader.

The city-port’s HSFO and total marine fuel sales volumes rose amid the MPA’s precautionary checks to curb the spread of COVID-19.

Contactless Bunkering Measures

“Barge operators are already accustomed to the mandatory contactless bunkering measures, so bunkering operations are still being completed within the specified time allowances”, said another bunker supplier.

Another Singapore-based trader said that a further widening on the Hi-5 spread would spur scrubber uptake, as the current differentials forestall shipowners’ expectations of quicker returns on their investments.

In Singapore, the Hi-5 spread averaged $298.90/mt in January 2020, as the market transitioned to the International Maritime Organization’s 2020 global low sulfur mandate, S&P Global Platts data showed.

Strong Case for Retrofitting Vessels

A shipowner said that the Hi-5 spreads in January 2020 made a strong case for retrofitting vessels with scrubbers, so the scrubber-fitted vessels coming online this year are from the backlog of projects disrupted in 2020 when the COVID-19 pandemic struck.

The spread narrowed to average $60.32/mt in September 2020, but firmed up to average $103.33/mt in January 2021, Platts data showed. The spread averaged $108.24/mt in March and $112.92/mt in April, staying mostly above the $100/mt mark so far in 2021.

Scrubbers Technology

In addition, scrubbers’ uptake has also accelerated as “people certainly have a better idea of scrubbers technology now, its use, crew training and costs,” an industry source said.

Around 3,800 scrubbers were in operation globally by end-2020, according to S&P Global Platts Analytics.

“We expect the pace of scrubber additions will slow in 2021, but the total will reach 4,400 by year end – equivalent to an estimated 1 million b/d of HSFO bunker demand,” Alexander Yap, senior analyst at Platts Analytics said May 21.

LSFO Sales Lower

Meanwhile, Singapore’s April LSFO sales inched lower as demand remained sluggish. Market sources disclosed that their sales of low sulfur bunker fuel in April fell between 5% and 10%.

In April, some bunker suppliers were struggling to clear inventories and eventually had to roll into May.

“To boost sales and increase ullage amid the weak demand, these suppliers would have offered at competitive rates,” a third trader said.

Propped Up Sales Figures

The trader also explained that the offers from this segment of suppliers could have propped up sales figures for April, while other suppliers that managed to balance their inventories had abstained from fixing at depressed prices.

Sales of the IMO-compliant grades — 180 CST, 380 CST and 500 CST bunker fuel — fell 1.5% year on year to 2.81 million mt in April, and edged down 0.7% from March, according to MPA data.

Congestion of Ships

The fall in LSFO sales, was in part due to congestion of ships in the US West Coast, resulting in fewer ship calls from there, a third bunker supplier said.

Although the use of scrubbers in ships has fueled some skepticism due to their role in environmental emissions, the Clean Shipping Alliance on May 3 said that on a life cycle emission basis, EGCS, or scrubber-fitted, vessels have a much lower CO2 footprint than those using either MGO or VLSFO.

“According to a 2020 study by CE Delft, the energy-intensive additional refining of MGO will create a larger carbon footprint that any minor increase due to the use on EGCS vessels, a fact that allows EGCS vessels to play an increasingly important role in meeting decarbonization goals,” it added.

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Source: S&P Global


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