- Hong Kong’s HSFO premiums dip due to poor demand in November.
- Supply tightness and off-spec cargoes impact availability.
- Zhoushan’s weather recovery shifts demand regionally
Hong Kong’s premiums for 380 CST high sulfur fuel oil (HSFO) on ex-wharf contracts dropped to $32-$40/mt in November due to a dip in demand. Market participants cited a weaker regional HSFO demand at the port than the previous month, reports SP Global.
Pricing Shift: Decline from October Rates
“Deals for Hong Kong’s November-loading term contractual supply of ex-wharf 380 CST HSFO were inked at lower premiums of $32-$40/mt to the FOB Singapore cargo value, down from $35-$40/mt in October, as HSFO fundamentals at the port weakened month over month.”
Spot demand decreased due to improved weather conditions in Zhoushan, which had previously disrupted bunkering in the region. With the port operational again, demand has partially shifted back.
Reduced HSFO Production
Upstream production of HSFO dropped as refineries shifted resources, prioritizing more profitable products over HSFO due to cost pressures.
“HSFO sales are shrinking, and this is likely to cause tightness in supply,” a bunker supplier noted, as off-spec cargoes and low inventories affected Hong Kong’s supply chain.
October-November Comparative Data
The average Platts premium for delivered HSFO in Hong Kong fell to $40.65/mt in November, an 18.2% drop from October’s $49.70/mt. The Nov. 8 assessment showed further decrease to $34.44/mt, a decline of 6.03% from Nov. 7.
Improving weather conditions have led shipowners to favor Zhoushan, making it a preferred hub for bunkering operations over Hong Kong, particularly when only bunkering is required.
The price spread between delivered marine fuel in Hong Kong and Zhoushan averaged $6/mt in November. This is a notable increase from October’s $3.33/mt, suggesting a preference shift due to pricing competitiveness.
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Source: SP Global
