Singapore HSFO Viscosity Spread Widens To 1-year High

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  • Singapore HSFO viscosity spread hit $14.00/mt the widest since April 9, 2018 from $13.15/mt, on tight blender or cutter stocks used to reduce viscosity.
  • Cutter stocks are indeed tight as Indian refineries produce less 180 CST grade due to higher gasoil demand.
  • Fresh demand from Pakistan for 180 CST market with 140,000 mt of 180 CST HSFO with maximum 3.5% sulfur for May-June delivery to Karachi.
  • 380 CST cash differential was assessed at minus $1.50/mt, down from minus $1.00/mt, while 180 CST cash differential was assessed to remain the same.
  • The ex-wharf 380 CST bunker premium over MOPS 380 CST HSFO averaged $1.40/mt in April, compared with $7.56/mt in January this year.

The Singapore high sulfur fuel oil (HSFO) viscosity spread, or the premium the 180 CST grade commands over 380 CST, hit $14.00/mt on tight blender or cutter stocks used to reduce viscosity, S&P Global Platts data showed.

What is the reason?

The Singapore HSFO viscosity spread, or the 180 CST grade commands over 380 CST, hit $14.00/mt on Friday, the widest since April 9, 2018 from $13.15/mt on Thursday, on tight blender or cutter stocks used to reduce viscosity.

“Fundamentally, cutter stocks are indeed tight, as Indian refiners are producing less [180 CST grade] during summer to produce more gasoil,” said a trader based in Singapore.

A source at an Indian refiner said refineries in India are producing less 180 CST grade due to higher gasoil demand.

“Also, fuel oil gets converted to Bitumen for road construction [after monsoon],” the source added.

Gasoil demand rise as monsoon ends

Traders said as the monsoon season is over, domestic demand for gasoil is seen rising in India.

On the other hand, the 180 CST market saw fresh demand from Pakistan. Pakistan State Oil bought 140,000 mt of 180 CST HSFO with maximum 3.5% sulfur for May-June delivery to Karachi.

First time fuel oil bought via tender

This is the first time the state-owned company is coming to the market this year to buy fuel oil via tender.

The product will go toward meeting the country’s utility demand as the nation goes into peak summer season, a source familiar with the matter told Platts.

On the other hand, 380 CST market has been weak, mainly due to ample supply and lackluster bunker market.

380 CST marine fuel oil Volume fall

The 380 CST cash differential was assessed at minus $1.50/mt Friday, down from minus $1.00/mt on Thursday, while the 180 CST cash differential was assessed at plus $1.75/mt Friday, unchanged from Thursday.

Meanwhile, the oversupply in 380 CST fuel oil was left undigested by tepid bunker uptake in the mainstay 380 CST bunker fuel market this year.

Q1 volumes for 380 CST marine fuel oil fell 8% on the year, data from the Maritime and Port Authority of Singapore showed.

Tumbled bunker premium

Bunker premiums have hence tumbled compared to the start of the year.

The ex-wharf 380 CST bunker premium over MOPS 380 CST HSFO averaged $1.40/mt in April, compared with $7.56/mt in January this year, Platts data showed.

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Source: Platts

 

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