- Competition to pressure Zhoushan’s bunker prices
- Steadier demand in Singapore amid bad weather, congestions at Zhoushan
A recent news article published in the Platts states that Singapore delivered bunker spread narrows to seven-month low.
Bunker price spread against Singapore
The Platts Zhoushan-delivered marine fuel 0.5%S bunker price spread against Singapore moved deeper into negative territory to an over seven-month low of minus $20/mt July 4, S&P Global Commodity Insights data showed, amid intensifying competition at the North Asian bunker hub.
The spread between both key Asian ports was last lower on Dec. 2, 2021, at minus $23/mt.
“Zhoushan’s bunker demand seems optimistic at the moment, as prices are now more competitive than before … July sales volumes should at least be steady or above the previous month’s sales,” a local bunker supplier said July 4.
Tight LSFO supply situation in China
The bunker supplier also added that the tight LSFO supply situation in China is recovering at a quicker pace compared to Singapore, thus the firmer bunker prices at the world’s largest bunker hub.
Higher volumes of replenishment stocks from domestic refineries are expected to supplement stockpiles for downstream bonded bunker sales in July, market sources said.
At least one of the state-owned oil majors which missed bunker sales targets in June, is very likely to raise LSFO production levels and offer more aggressively in the downstream markets at Zhoushan, according to local traders.
Market participants polled by S&P Global estimated that the bonded bunker fuel oil sales fell about 20% from May to around 400,000 mt in June.
Platts Zhoushan-delivered marine fuel 0.5%S bunker premiums over the benchmark FOB Singapore Marine Fuel 0.5%S slipped to average $97.72/mt July 1-4, compared with $101.32/mt in June and $75.39/mt in May, S&P Global data showed.
However, overall LSFO stockpiles at Zhoushan are likely to remain less-than-ample during early-July as some bunker suppliers reportedly faced limited availabilities for prompt deliveries, sources also said.
Adverse weather, congestion in Zhoushan
Forecasts for strong winds and high wavesin China’s Port of Ningbo-Zhoushan throughout the week started July 4 will likely disrupt refueling operations and dent demand with suppliers delayed bunker fuel deliveries, S&P Global previously reported.
“Some refueling operations are still ongoing for now, but the weather events could significantly disrupt barging and bunkering schedules,” a second bunker supplier said.
Meanwhile, some shipowners also reported that in-port congestions at Ningbo-Zhoushan resulted in the diversion of bunker demand to Singapore.
Steady demand continues
Amid the LSFO supply tightness, steady demand thus continues to strengthen bunker prices in Singapore.
Singapore’s residual fuel stocks fell 2.7% week on week to 20.768 million barrels in the week to June 29, pressured by healthy demand from the bunker segment, according to latest data from Enterprise Singapore.
“Vessel owners know that supply in Singapore is extremely tight and are booking cargoes well in advance as they know that it is virtually impossible to fulfil spot requirements. This is supporting prices greatly,” said a Singapore-based trader.
Additionally, high freight rates led owners to prioritize the optimization of voyages and avoid deviations for bunker-only calls, market sources said.
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