Singapore — Asia's 180 CST high sulfur fuel oil market has come under pressure amid waning demand for the grade from the power generation sector, while high sulfur fuel oil supply over first-quarter 2021 is expected to increase amid additional supply from the Middle East.
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Register NowAsian Marine Fuel 0.5% sulfur, which has seen stronger margins this quarter, has incentivized some refiners to offer more spot cargoes to the export market.
MARINE FUEL 0.5% SULFUR
** A strong fourth-quarter crack spread, as compared with the third quarter, has caused some Asian refiners to step up sales of spot cargoes, with India's Mangalore Refinery and Petrochemicals Limited offering its second cargo in less than a month, loading over Jan. 1-3, according to the tender document.
**The fourth-quarter Singapore marine fuel 0.5% crack spread to front month Dubai crude swap has averaged $9.43/b so far, $1.89/b higher from the third quarter, Platts data showed.
** December demand has been fairly muted in key bunkering hubs of Singapore and Fujairah, traders in both regions said, adding that this is to be expected towards the end of the year.
** A jump in Singapore marine fuel 0.5%S cargo values due to firming crude markers, led buyers to drift to the sidelines in anticipation that values may drop from a potential correction in crude.
** With a similar volume of Western cargoes expected to arrive in Asia in December, compared with November, supply fundamentals are likely to remain unchanged. Traders said about 2.5 million mt of low sulfur fuel oil is likely to reach Singapore in December.
** Prompt marine fuel 0.5%S crack, or the spread between January marine fuel 0.5%S swap to same month Dubai crude swap, was trading 31 cents/b lower from the Dec. 4 Asian close of $10.49/b in mid-morning trades.
HIGH SULFUR FUEL OIL
** According to brokers' indications and ICE data, the morning notional values for the Singapore 380 CST high sulfur fuel oil January-February timespread Dec. 7 was stable at $1/mt from the Dec. 4 assessment, with bids at minus 50 cents/mt against offers at $1.50/mt.
** The 180 CST HSFO cash differential to the Mean of Platts Singapore strip flipped to a discount for the first time in two months on Dec. 4, as demand from Pakistan, a major importer of HSFO, failed to materialize for H1 January, market traders said.
** The cash differential was assessed at minus 25 cents on Dec. 4, Platts data showed.
** A severe shortage of high sulfur bunker fuel in South Korea drove its differential to benchmark FOB Singapore high sulfur fuel oil cargo assessments higher by $46.36/mt week on week to $69.93/mt on Dec. 4, Platts data showed.
**Sole HSFO producer in South Korea, GS Caltex's blendstock is delayed, and earliest availability for HSFO is from Dec. 25 onwards.
**In China, tight cargo and barge availability supported bunker fuel premiums. Domestic refiners have slowed production while waiting for the second round of fuel oil export quota as run rates were also capped by poor margins. Market sources said refiners were unwilling to accept export tax rebate for a small amount of fuel oil given more competitive domestic asphalt prices.
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