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Analysis: Singapore may witness robust bunker sales for third consecutive year

After posting near 50 million mt in annual sales for two consecutive years, Singapore is hoping to push its bunker fuel sales even further in 2019 as it tightens quality norms and strengthens port infrastructure ahead of the International Maritime Organization’s global sulfur limit rule deadline in 2020.

“Singapore retained its position as the world’s top bunkering port in 2018, with annual bunker sales volume close to the 50 million-ton mark for the second year consecutively,” the Maritime and Port Authority of Singapore said in a statement Monday.

Although Singapore’s 2018 bunker fuel sales volumes declined 1.6% year on year to 49.8 million mt, industry sources expect marine fuel consumption in the world’s top bunkering port by volumes to rebound because of an anticipated growth in demand for cleaner fuels.

The jump in demand for 0.5% sulfur bunker fuel oil is likely to continue in future as the IMO 2020 rule looms, industry sources told S&P Global Platts this week.

Sales of low sulfur fuel oil 180CST in the city-port increased more than fivefold to hit 256,600 mt in 2018, data released by the MPA showed.

Moving into 2019, bunker suppliers and traders expect Singapore’s total marine fuel oil demand to touch at least 4 million mt on an average per month.

“The Singapore port is still likely to see pretty stable monthly demand, though there might be some gradual shifts in volumes from high sulfur bunker fuel to LSMGO,” a bunker supplier said.’

FUEL QUALITY ISSUES SUBSIDE
2018 saw a spate of bunker fuel quality issues worldwide that emanated from Houston and subsequently impacted ports globally, including Singapore.

Up to 50 vessels in Singapore were heard to have received off-specification bunker fuel around June-August, some sources said, temporarily dampening buying sentiment.

Some customers opted to bunker at ports in South Korea and Japan in August, even though fuel prices were higher at those ports.

More recently, in January 2019, Fuel Oil Bunkering Analysis and Advisory Service, under Lloyd’s Register, issued an alert for off-spec sediment fuels residual bunker fuel samples it had tested from Singapore.

However, the impact hasn’t been significant and has subsided for now, industry sources said.

“My customers have not asked me for any additional [bunker fuel oil] tests because of this issue,” a bunker supplier said.

Firm bunker fuel premiums in Singapore also deterred buying interest in some months to an extent, sources added.

Singapore delivered 380 CST bunker fuel premium averaged $14/mt over the Mean of Platts Singapore 380 CST high sulfur fuel oil assessments in December, compared with $22/mt over MOPS 380 CST HSFO in November, Platts data showed.

So far in January, this figure averaged $15/mt over MOPS, Platts data showed.

JUMP IN LSFO DEMAND
“Singapore has been quite agile in preparing for the IMO 2020 rule,” an industry consultant said.

Trade sources expect demand for LSFO to increase further this year as IMO’s 2020 deadline approaches.

To protect the marine environment, Singapore’s recent decision to ban the discharge of wash water from open loop exhaust scrubbers in Singapore port water from January 1, 2020 will also give 0.5% sulfur bunker fuels a boost, they said.

“Some shipwoners who are not installing scrubbers will end up using only LSFO,” a trader said.

Other initiatives aimed to boost LNG bunkering as well as the MPA’s plan to produce a list of suppliers that are able to supply compliant fuel by the middle of 2019 are also positive, sources said.

The uptick in LSFO demand is likely to be sharper from Q4 onwards, traders said.

“Three months or so is good enough a time to reflect this [spurt in LSFO demand],” the consultant said.

LEVERAGING TECHNOLOGY
The Port of Singapore has been proactively gearing up for future needs of the bunker industry.

On January 1, 2017, Singapore became the first country worldwide to introduce a mass flow meter mandate for fuel oil deliveries. MFMs measure the flow rate in the pipe, gauging the quantity as well as the mass and density of the fuel, and significantly reducing the risk of vessels receiving contaminated fuel.

The MPA is now scheduled to mandate the use of MFMs for delivery of distillates at the Port of Singapore from July 1, 2019.

“Vessels coming to Singapore for bunker appreciate the operational trust and efficiencies MFMs bring to the bunker delivery process,” a bunker supplier said earlier.
Source: Platts

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