Singapore — Gradually improving Asian bunker fuel market fundamentals, particularly for high sulfur fuel oil, as well as production cuts in the low sulfur fuel oil market have improved near term projections for both markets, according to traders based in Singapore.
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Register NowThe expectations for HSFO are, however, tempered by expectations that demand from the Middle East, which sustained the surge in buying activity for Singapore 380 CST HSFO since July will soon peter out, according to traders.
MARINE FUEL 0.5% SULFUR
- The morning Aug. 17 ICE data showed that the Singapore Marine Fuel 0.5% September/October timespread with bids at minus $2.75/mt against no offers were largely stable from Platts Aug. 14 assessment of minus $2/mt.
- The Asian Marine Fuel 0.5%S market has been on an upward momentum in recent weeks, supported by both supply and demand. While bunker demand has been making a slow recovery, supply is expected to stay limited as Asian refiners have cut run rates due to weak demand for oil products.
- South Korea is expected to remain a net importer of low sulfur fuel oil in September as well with LSFO production cuts set to continue. The spread between 10 ppm gasoil and Marine Fuel 0.5%S shrank to $38.75/mt on Aug. 14, the lowest since May 22, when it was $37.43/mt, as a result of firm Marine Fuel 0.5%S prices and relatively weak gasoil prices.
- As a result of the expected decline in LSFO supply, traders' expectations of South Korea's bunker fuel have firmed. The Busan/Ulsan delivered marine fuel 0.5%S differential against FOB Singapore 10 ppm gasoil assessments was up $13.05/mt week on week at $11.46/mt on Aug. 14, Platts data showed.
- In Japan, fundamentals in the bunker fuel market is expected to remain balanced amid a slight uptick in demand, with some traders having sold all of their monthly quota volumes already. The Japan delivered marine fuel 0.5%S differential against FOB Singapore 10 ppm gasoil assessments improved 5 cents/mt week on week at minus $29.54/mt on Aug. 14, Platts data showed.
HIGH SULFUR FUEL OIL
- Early Aug. 17 indications from ICE and market brokers for the Singapore 380 CST high sulfur fuel oil September/October timespread were thin, with offers reported at 75 cents/mt, well above Platts Aug. 14 assessment of minus 25 cents/mt.
- The Asian high sulfur fuel oil market continues to be bullish although both 180 CST and 380 CST grades have slipped into contango, supported by demand from the power sector. Saudi Arabia is still buying the 380 CST grade, but the end of peak demand season is around the corner, market sources said. "Stocks in Europe seem low. Asian HSFO is likely to stay strong for a little longer," a fuel oil trader said.
- With sales of 380 CST high sulfur bunker fuel climbing 24.65% on the month to 928,300 mt in July, the second straight monthly rise, preliminary estimates from Singapore's Maritime and Port Authority showed, traders' estimates for August, based on sales done so far, indicate an expectation of a sustained, stable demand.
- Demand for high sulfur bunker fuel has been largely stable since the transition to cleaner fuels under the IMO 2020 mandate, effective Jan. 1, Platts reported earlier. However, demand started to pick up in June as more vessels completed scrubber installations. With more scrubber installations to be completed, demand is expected to continue in the near term. The Singapore delivered 380 CST bunker premium to Singapore 380 CST HSFO cargo assessments increased to $17.60/mt on Aug. 14, from $16.88/mt on Aug. 7.
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