- LSMGO ex-wharf cargo Nov differentials inch up to around minus $1/b
- Traders see lower demand for Singapore gasoil bunker in Nov
Term contractual supply of November-loading barrels of Singapore ex-wharf low sulfur marine gasoil, with 0.1% sulfur, were inked at differentials of around minus $1/b against benchmark FOB Singapore 10 ppm sulfur gasoil cargo assessments, reports Platts.
LSMGO ex-wharf cargo differentials inch up
The differentials were mostly above the $1.50/b-$1.80/b discounts for October-loading contracts, with traders attributing the gradual strengthening of the LSMGO market to tighter-than-usual supply.
Previously, differentials for October’s LSMGO ex-wharf supply trended significantly higher than the $2.50/b discounts signed for September loading contracts.
In the downstream market, however, LSMGO demand was mostly average at best, and likely to stay capped on some trading days.
Sales of LSMGO around the Singapore hub, inclusive of bio-blended products, totaled 334,700 mt in September, up 11.4% on the month and 26.3% on the year, reaching the highest monthly sale for 2024, latest preliminary data from the Maritime and Port Authority of Singapore showed.
Platts assessed the Singapore-delivered LSMGO differential against the FOB Singapore 10 ppm sulfur gasoil assessment at $10.17/mt over Nov. 1- 11, $4.70/mt lower than the average in October, Commodity Insights data showed.
Two MR-sized shipments of gasoil, sourced from the Daesan refinery in South Korea, were heard arriving in Singapore in November, replenishing stockpiles, according to industry sources, while weaker freight rates also helped lower costs to the South Korean exporters.
Upstream fundamentals supported
Platts, part of Commodity Insights, assessed clean Singapore-South Korea MR-sized tanker rates at a multi-year low of $13.62/mt for three consecutive trading days through Nov. 11, averaging $14.22/mt since November to date and down from $16.81/mt in October and $16.44/mt across September.
Clean MR tanker rates along this route were last assessed lower at $13.48/mt on Feb. 22, 2022.
In late October, the South Korea government decided to extend the tax cut on auto fuels by another two months through the end of December but will lower rates for the reduction. The country will apply a 23% tax reduction for diesel, down from the previous 30%, and reduced gasoline tax cuts to 15% from the 20% prior, Commodity Insights reported earlier.
The lower tax benefits are likely to slow down the country’s domestic gasoil demand and may lead to an increase in South Korea gasoil exports.
Meanwhile, the spread between the the marine fuel price in Singapore and South Korea has climbed, which might incentivize South Korea companies to bring more gasoil to the Straits.
The spread of Singapore’s delivered LSMGO bunker prices versus the same delivered grade in South Korea averaged plus $6.93/mt Nov. 1-11, compared to minus $11.03/mt across October and minus $20/mt in September, according to Platts data from Commodity Insights.
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Source: Platts
