Singapore — Medium sulfur fuel oil has become a viable option as a blending component in the high sulfur fuel oil pool amid the decline in the Singapore 10 ppm gasoil market, traders said, while bunker suppliers in North Asia remain cautious in the recovery of low sulfur bunker demand in the southern ports of the region, with bad weather impeding operations there.
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- Morning discussions on the Singapore Marine Fuel 0.5% September-October timespread opened Sept. 7 at minus $2.85/mt, stable from the Sept. 4 assessment, brokers' indications and ICE data showed.
- Traders expressed reservations about a recovery in the low sulfur fuel oil market despite Singapore's onshore commercial residue stocks falling to a seven-month low on Sept. 2, with high inventory in floating storage and lackluster demand weighing on the market.
- In addition, the market expected inflow of arbitrage cargoes to increase in September from August, which is another bearish factor. The October Marine Fuel 0.5%S-Dubai crude swap spread narrowed to $6.09/b, the lowest since June 30, Platts data showed.
- Demand for low sulfur bunker fuel has been muted in the week ended Sept. 4 with market fundamentals expected to remain unchanged in the near term.
- According to market participants, some demand is lost to Chinese ports such as Ningbo and Qingdao where suppliers are able to offer competitive pricing to entice shipowners.
- The Singapore-delivered Marine Fuel 0.5%S bunker premium to Singapore Marine Fuel 0.5% cargo increased to $15.60/mt on Sept. 4 from $15.15/mt on Aug. 28, S&P Global Platts data showed.
- In the North Asian market, bunkering at the southern ports of South Korea and western ports of Japan is expected to impact some operations at the start of the week ending Sept. 11.
- Suppliers are cautious about making offers on bunker fuel as delivery dates still remain uncertain, market sources said.
- In Hong Kong, demand remained on a downward trend with no signs of the government lifting the 14-day mandatory quarantine for cargo ships. Suppliers who already have term contracts with ships that have regular cargo operations were better placed than those that rely on bunker-only calls, traders said, which had dried up.
HIGH SULFUR FUEL OIL
- According to brokers' indications and ICE data, mid-morning indications for the Singapore 380 CST high sulfur fuel oil October-November timespread were stable from the Sept. 4 assessment of minus $1/mt, with bids of minus $1.75/mt against offers of minus 50 cents/mt.
- With the spread between 10 ppm gasoil and 380 high sulfur fuel oil narrowing, the likelihood of medium, or approximately 1%, sulfur fuel oil to be blended into HSFO has increased, traders said.
- The medium sulfur grade, which is currently trading at discounts of $70-$80/mt to Singapore 10 ppm gasoil, is typically blended into LSFO. The spread between Singapore 10 ppm gasoil and Singapore 380 CST HSFO was assessed at $85/mt on Sept. 4, the narrowest since April 28, Platts data showed.
- Market participants are expecting more scrubber-fitted ships to bunker at Singapore for HSFO due to it being among the few ports allowing crew changes during COVID-19, market sources said.
- At the same time, Singapore's HSFO prices are also the most competitive in the region. The Singapore delivered 380 CST bunker fuel price has averaged $279.36/mt since the start of August compared with $288.30/mt in Hong Kong and $315.74/mt in South Korea, Platts data showed.
- The Singapore-delivered 380 CST bunker premium to Singapore 380 CST HSFO cargo assessments increased to $17.51/mt on Sept. 4 from $15.52/mt on Aug. 28.
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