On March 18th, the premiums for 0.5%S bunker fuel delivered in Zhoushan and Shanghai, compared to FOB Singapore marine fuel 0.5% cargo values, shifted to a discount of $2.19/mt. This represents an eight-month low. This change is attributed to consistently weak demand compounded by prolonged weather disruptions, which have finally eliminated the small premiums that had existed since mid-January, reports S&P Global.
LFSO Differentials Drop
Platts data indicates that the Zhoushan and Shanghai low sulfur fuel oil (LSFO) differentials have reached their lowest points since late June 2024.
In Zhoushan, LSFO offers ranged from $496 to $525 per metric ton (mt) for deliveries between March 23 and 30, with a final trade occurring at $500/mt for delivery from March 24 onwards.
In Shanghai, offers were slightly higher, between $500 and $510/mt, for deliveries from March 21 to 30. The lowest trade recorded was $498/mt for a 1,200 mt parcel loading on March 30.
Platts assessed the LSFO grade at $498/mt for both Zhoushan and Shanghai on March 18, a decrease of $6.22/mt from the previous day.
March demand has been weaker than February due to a cold spell in the first two weeks of the month, which caused intermittent halts to bunkering operations in Zhoushan. Outer anchorages were suspended for most of this period, leading to some order cancellations.
However, weather conditions are expected to improve in the coming week, according to the Zhoushan Marine Meteorological Research Center, with wind speeds mostly within the 29-49 km/h range until March 26, although some sporadic gales with speeds of 50-74 km/h are expected between March 23 and 26.
Regional Competition
Due to strong regional competition and competitive LSFO bunker prices in Zhoushan, some downstream demand has shifted from Singapore, the world’s largest bunkering hub, since the beginning of 2025.
This has decreased LSFO demand volumes in Singapore, leading to increased competition among local suppliers and lower delivered premiums, while also struggling to reduce large stockpiles.
Traders in Singapore report difficulties in closing spot LSFO deals due to aggressive pricing from local suppliers.
Since the year’s first quarter, some shipowners have chosen to fulfill parts of their spot and term contract needs in Zhoushan due to the favorable pricing.
The price spread between Singapore’s delivered LSFO and Zhoushan’s delivered LSFO has widened to an average of $4.62/mt since the first quarter, reversing the previous trend of Singapore being cheaper by an average of $19.34/mt in the fourth quarter of 2024, according to Platts data.
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Source: S&P Global
