Medium sulfur fuel oil has become a viable option as a blending component in the high sulfur fuel oil pool, reports S&P Global Platts.
This is amid the decline in the Singapore 10 ppm gasoil market, traders said, while bunker suppliers in North Asia remain cautious in the recovery of low sulfur bunker demand in the southern ports of the region, with bad weather impeding operations there.
Marine Fuel 0.5%Sulfur
– Morning discussions on the Singapore Marine Fuel 0.5% September-October timespread opened Sept. 7 at minus $2.85/mt.
– Traders expressed reservations about a recovery in the low sulfur fuel oil market despite Singapore’s onshore commercial residue stocks falling to a seven-month low on Sept. 2.
– In addition, the market expected an inflow of arbitrage cargos to increase in September from August. The October Marine Fuel 0.5%S-Dubai crude swap spread narrowed to $6.09/b, the lowest since June 30.
– Demand for low sulfur bunker fuel has been muted in the week ended Sept. 4 with market fundamentals expected to remain unchanged in the near term.
– The Singapore-delivered Marine Fuel 0.5%S bunker premium to Singapore Marine Fuel 0.5% cargo increased to $15.60/mt on Sept. 4 from $15.15/mt on Aug. 28.
– Suppliers are cautious about making offers on bunker fuel as delivery dates still remain uncertain, market sources said.
– In Hong Kong, demand remained on a downward trend with no signs of the government lifting the 14-day mandatory quarantine for cargo ships.
High Sulfur Fuel Oil
– According to brokers’ indications and ICE data, mid-morning indications for the Singapore 380 CST high sulfur fuel oil October-November timespread were stable from the Sept. 4 assessment of minus $1/mt.
– With the spread between 10 ppm gasoil and 380 high sulfur fuel oil narrowing, the likelihood of medium, or approximately 1%, sulfur fuel oil to be blended into HSFO has increased, traders said.
– The medium sulfur grade, which is currently trading at discounts of $70-$80/mt to Singapore 10 ppm gasoil, is typically blended into LSFO.
– Market participants are expecting more scrubber-fitted ships to bunker at Singapore for HSFO due to it being among the few ports allowing crew changes during COVID-19, market sources said.
– The Singapore-delivered 380 CST bunker premium to Singapore 380 CST HSFO cargo assessments increased to $17.51/mt on Sept. 4 from $15.52/mt on Aug. 28.
Did you subscribe to our daily newsletter?
It’s Free! Click here to Subscribe!
Source: S&P Global Platts
