Singapore — Traders expect fuel oil supply for both low sulfur and high sulfur grades to remain tight in the coming weeks as refiners are cutting run rates globally due to weak middle distillate demand. This reduced an inflow of arbitrage cargoes from the West to Asia, while bunker demand is largely expected to remain stable.
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- Singapore Marine Fuel 0.5%S market has been supported amid tightening supply. "Cargo availability is still short, arbitrage window is closed and bunker premium is maintaining above $10/mt on Marine Fuel 0.5%S basis," said a fuel oil trader based in Singapore.
- Singapore is expected to receive 1.5 million-2 million mt of low sulfur fuel oil from the West in November, similar to October, as the LSFO spread between Asia and Europe, or East/West spread, was narrow when the November-arrival cargoes had traded, traders told S&P Global Platts recently.
- As a result of strong LSFO market, coupled with weak gasoil market, the spread between 10 ppm gasoil and Marine Fuel 0.5%S narrowed to $3.48/mt on Oct. 23, the lowest since April 21, when it was assessed minus $10.11/mt, Platts data showed.
- Demand for low sulfur bunker fuel in Singapore is expected to remain largely stable. A couple of suppliers said they had limited available barges for October and could only supply low sulfur bunker fuel for early-November delivery. However, this is not likely to impact market fundamentals, sources said.
- The Singapore-delivered Marine Fuel 0.5%S bunker premium to Singapore Marine Fuel 0.5% cargo decreased 72 cents to $14.16/mt on Oct. 23 from $14.88/mt on Oct. 16, S&P Global Platts data showed.
- Bunker fuel supply in Japan for the last week of October is expected to be tight with refiners ENEOS and Cosmo Oil having run out of availability. As a result, Tokyo Bay delivered Marine Fuel 0.5%S differential to FOB Singapore 10 ppm gasoil cargo assessments has risen $34.16/mt week on week to minus $14.01/mt on Oct. 23, S&P Global Platts data showed.
- High cargo costs continue to drive up low sulfur bunker fuel premiums in China, with suppliers cautious about bringing in cargo from Singapore. Shanghai delivered Marine Fuel 0.5%S differential to FOB Singapore 10 ppm gasoil cargo assessments was up $6.91/mt week on week to $18.76/mt on Oct. 23, Platts data showed.
HIGH SULFUR FUEL OIL
- Supply of high sulfur fuel oil is expected to be even tighter than low sulfur fuel oil as cargoes are moving to China, where HSFO prices are higher than Singapore even after freight and tank costs are added.
- The Shanghai Futures Exchange Oct. 23 session closed with December 380 CST HSFO price at Yuan 1,866/mt ($279.90/mt), according to its website. Meanwhile, Singapore November 380 CST HSFO swaps was assessed at $263.70/mt on Oct. 23.
- HSFO demand from power sector was still coming from Pakistan, Bangladesh and Saudi Arabia.
- In the downstream bunker market, tight availability of HSFO bunkering barges had eased and market participants expect demand to stabilize.
- The Singapore-delivered 380 CST bunker premium to Singapore 380 CST HSFO cargo assessments increased to $24.05/mt on Oct. 23 from $21.03/mt on Oct. 16, Platts data showed.
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