Singapore bunker fuel suppliers are not optimistic about the outlook for sales in the third quarter with demand shifting to East Asian ports.
A number of them said that July sales were likely be only marginally higher from June, and they were not too positive about August and September either.
Traders estimated that more than 1 million mt of fuel oil from the Middle East would reach Singapore in August — more than double from July and bringing total imports to 5 million mt, up from 3 million-4 million mt in July.
The market could see some aggressive offers as a result, sources said.
“Nowadays, there is no premium for prompt deliveries, delivered price is not great. I think this month will be tough for everyone,” said a trader.
Bunker sales in June at the port of Singapore totaled 3.84 million mt, the lowest monthly volume year to date and down 6.1% year on year. It was also down 8.2% from May.
In a further sign of a weakening market, ex-wharf 380 CST bunker term offers for August were heard at a premium of $2-$3/mt to the Mean of Platts Singapore 380 CST high sulfur fuel oil assessments.
In contrast, July ex-wharf 380 CST bunker deals were inked at a premium of $4-$4.50/mt MOPS 380 CST HSFO assessments.
“It’s a buyers’ market now. Sellers are keen to move bigger volumes at low prices, and that’s not a good sign,” a local supplier said.
CHEAPER PRICES AT EAST ASIAN PORTS
Trade sources said that some demand shifted to ports such as Hong Kong, Busan, Zhoushan and Ningbo in June due to cheaper prices there.
Hong Kong delivered 380 CST bunker prices were just $1.21/mt more expensive than Singapore in June, compared with $3.28/mt in May, S&P Global Platts data showed.
On June 2, Hong Kong delivered bunker price was $7.25/mt lower than Singapore’s, the data showed.
In June, Shanghai delivered 380 CST bunker fuel was $9.59/mt higher than in Singapore, in line with market estimates of a $10/mt spread between most Chinese ports and Singapore.
The Shanghai-Singapore spread averaged $12.33/mt in June.
“If the spread is wider, then vessels would come to Singapore. But if it’s only $10/mt, you don’t want to deviate to Singapore for a bunker-only call,” an analyst said.
Zhoushan, with cheaper ship chandling costs, was also said to have drawn some demand from Singapore as it a major ship-repair base. Additionally, bunker fuel at $315-$318/mt was comparable to Hong Kong, Ningbo and Shanghai, Chinese traders said.
China has surplus bunker fuel as a number of independent refiners have substituted fuel oil with crude as feedstock, resulting in more fuel oil available for bunkering, and the fuel is offered at a discount to get rid of stocks, they added.
CHINA BUNKER SALES GROW
The trend of bunkering in China is rising as more ships discharge mixed aromatics cargoes or load distillates there.
A shipping executive said that more MR tankers were bunkering in China and South Korea.
According to industry estimates, close to 40 MRs per month are moving distillates from China, South Korea and Japan to Australia.
“There is a strong demand for gasoil in Australia for mining purposes and a large part of this demand is met from South Korea, China and Japan. This is one of the factors that is helping in diversifying of bunkering sources in Asia,” a shipping source said.
While bunker prices are $15-$20/mt higher in South Korea compared with Singapore, shipowners try to pass the additional costs to the charterers, industry sources said.
MR freight on the South Korea-Australia and China-Australia routes is typically higher by a few worldscale points to Singapore-Australia.
“The cost of deviating to Singapore is more expensive than taking bunker fuel in South Korea,” a shipping executive said.
He added that his company’s LPG vessels, which used to sail from the US via the Cape of Good Hope, Singapore to Japan, now take 20,000 mt/month of bunkers at Panama Canal. Previously, this quantity was lifted in Singapore.
FEWER VESSEL ARRIVALS
Vessel arrivals in Singapore for bunkering on a year-on-year basis have been falling since August last year, according to data from the Maritime and Port Authority of Singapore.
The decline has been more pronounced this year. Ships calling at Singapore only for bunkering have fallen for six consecutive months this year.
The steepest drop was in April, down 4% year on year to 3,495 vessels. Last month, 3,378 vessels bunkered at Singapore, down 3.9% year on year.
Bunker sales would have been even lower had shipowners not started buying bigger quantities — 3,000 mt and above — a trend that developed this year with the implementation of mass flow meters.
Overall, industry sources said demand for bunker fuel in Singapore in the third quarter was expected to be middling, if not weak amid competition among sellers putting pressure on prices.
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Source: Platts
