- Term ex-wharf 0.5%S LSFO premiums in Hong Kong fell to $27-$34/mt in January due to abundant supply and subdued demand, a sharp drop from December levels of $45-$49/mt.
- While HSFO premiums also declined in January, competition remains less intense compared to LSFO.
- Increased competition from Chinese ports and slower seasonal demand could further pressure LSFO premiums.
The refined fuel market experienced a notable decline in January 2025, with low-sulfur fuel oil (LSFO) and high-sulfur fuel oil (HSFO) premiums under pressure. Ample supply, weaker seasonal demand, and heightened competition from regional ports contributed to the downward trend. However, potential geopolitical shifts and supply chain dynamics could influence market conditions in the coming months, reports SP Global.
LSFO Premiums Drop Amid Oversupply
Hong Kong’s ex-wharf 0.5%S LSFO premiums fell to $27-$34/mt in January, down significantly from December’s $45-$49/mt. Market participants attribute the decline to robust supply and limited downstream demand.
Increased competition from regional ports, particularly post-Lunar New Year, could further soften LSFO premiums.
Weaker Demand Impacts LSFO and Marine Gas Oil
Term premiums for Hong Kong ex-wharf low sulfur marine gasoil (0.1%S) fell to $15-$19/mt, compared to $21/mt in December.
Sluggish seasonal demand prompted suppliers to cut imports by 20% compared to January 2024.
HSFO Premiums Maintain Relative Stability
HSFO premiums for January parcels settled at $24-$30/mt, down from December’s $32-$45/mt.
Limited competition among Hong Kong suppliers has helped stabilize HSFO premiums compared to LSFO.
Post-Holiday Market Dynamics and Geopolitical Concerns
Market participants anticipate February to remain slow due to lingering Lunar New Year effects.
Additionally, potential geopolitical shifts, including sanctions on Russia or policy changes in the US, could disrupt global HSFO supply chains.
Price Trends Indicate Downward Pressure
Platts assessed Hong Kong-delivered LSFO premiums over FOB Singapore values at $17.49/mt in January, a 60% drop from December’s $44.38/mt.
HSFO premiums for 380 CST cargoes averaged $25.74/mt in January, down from December’s $43.34/mt
Did you subscribe to our daily Newsletter?
It’s Free Click here to Subscribe!
Source: SP Global
