- Singapore high sulfur and Marine 0.5% sulfur fuel oil price spread widened to fresh highs ahead of IMO 2020.
- The October, November and December 2019 spreads for Marine 0.5% FOB Singapore/380 CST HSFO Singapore swap reached $167/mt, $187/mt and $201/mt.
- The spread to 380 CST HSFO to widen in Q4 2019, but then again it will depend on crude prices then as well.
- Nearly 19 VLCCs are storing low sulfur fuel oil in the Singapore region while more clarity for MF 0.5% sulfur oil will emerge down the curve as we get closer to 2020.
- LSFO expected to be shipped to Singapore from the US Atlantic Coast before as part of the preparation for IMO 2020.
- The ULCC Oceania was fixed from Rotterdam to land in Singapore at the end of September, carrying parcels of IMO 2020 compliant fuel and crude.
The spread between Singapore HSFO and Marine 0.5% sulfur fuel oil for the prompt months have widened to fresh highs on Thursday, ahead of IMO 2020 sulfur mandate, reports Platts.
HSFO spreads reaches high
With the 0.5% sulfur cap set by the IMO from next year, high sulfur fuel oil demand is expected to drop. At the same time low sulfur fuel oil demand is poised to pick up.
The October, November and December 2019 spreads for Marine 0.5% FOB Singapore/380 CST high sulfur fuel oil Singapore swap touched its highest at $167/mt, $187/mt and $201/mt respectively.
Wide cargo differential foreseen
“Nobody wants to sell [low sulfur cargoes] cheap, [the high MF 0.5%-380CST HSFO December spread] is from the expectation that the cargo differential will be very wide,” said a Singapore-based trader.
In comparison, shipowners had earlier expected the premium for low sulfur cargoes to range around $150/mt.
MF 0.5% sulfur oil clarity
The spread between Marine 0.5% FOB Singapore/380 CST HSFO Singapore swap for December 2019 was bid and offered at $200/mt and $203.75/mt respectively on ICE as of 0230 GMT Friday in Singapore.
“The spread to 380 CST HSFO will widen as we step into Q4 2019, but then again it will depend on crude prices then as well,” said another Singapore trading source.
“More clarity for MF 0.5% sulfur oil will emerge down the curve as we get closer to 2020,” the source added.
Singapore storage units
Traders said most floating storage units in Singapore were holding low sulfur fuel oil or crude oil cargoes suited for blending into IMO 2020 compliant low sulfur fuel oil, and another 1 million mt was in landed storage.
According to a Singapore-based trader, in excess of 19 VLCCs are storing low sulfur fuel oil in the Singapore region.
LSFO from US to Singapore
Market sources said low sulfur fuel oil was expected to be shipped to Singapore from the US Atlantic Coast before as part of the preparation for IMO 2020.
The ULCC Oceania was fixed from Rotterdam to land in Singapore at the end of September, carrying parcels of IMO 2020 compliant fuel and crude.
The spot differential for the FOB Singapore MF 0.5% cargo was assessed higher by $5/mt day on day to MOPS minus $15.50/mt Thursday, showed Platts data.
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Source: Platts
