Asia residual fuel: Key market indicators this week
Bunker premiums have remained buoyed by tighter availability in the prompt period, with suppliers expecting a pickup in demand for low sulfur bunker fuel in Singapore after the holidays, suppliers said.
A similar tight supply situation in the Japanese high sulfur bunker fuel market due to berth congestion and compromised refinery operations after the Feb. 13 earthquake has fueled expectations that bunker fuel availability will normalize only in March.
** The Singapore Marine Fuel 0.5%S March/April backwardation on Feb. 22 narrowed to $2.75/mt from the Feb. 19 assessment, with bids seen at $2/mt against offers at $3/mt, Intercontinental Exchange and brokers’ data showed.
** The Singapore low sulfur bunker fuel market is expected to come out of a slump in the week started Feb. 21 as north Asian shipowners resume buying activity post Lunar New Year.
** Despite weak demand Feb. 15-19, loading congestion and barge tightness supported the Singapore delivered marine fuel 0.5%S premium to the FOB Singapore marine fuel 0.5%S cargo assessment, which rose 19 cents/mt week on week at $16.49/mt on Feb. 19, S&P Global Platts data showed.
** Product was also especially tight over the prompt period, with some suppliers only able to supply from March onward. Volumes of Singapore delivered 380 CST high sulfur bunker were also low, with premiums against FOB Singapore high sulfur fuel oil cargo falling $1.39/mt week on week at $15.15/mt.
** In north Asia, South Korean refiners are yet to raise operation rates at their crude distillation units due to sluggish refining margins for light and middle distillates, and bunker fuel supply is likely to remain tight in March as a result, market sources said.
** Supply at Hong Kong and Shanghai/Zhoushan is sufficient to meet demand while demand is recovering after the Lunar New Year holidays, market sources said.
High sulfur fuel oil
** Morning discussions for the Singapore high sulfur fuel oil viscosity spread for March opened Feb. 22 at $5.25/mt, stable from the Feb. 19 assessment, according to brokers’ indications and ICE data.
** Reduced HSFO production in India over March has led to an increase in imports, according to local refiners, as demand for gasoline and gasoil remains high.
** Bunker fuel supply in Tokyo Bay — for both low sulfur and high sulfur grades — is expected to remain tight at least until early March as berths are congested, market sources said.
** Japan’s largest bunker supplier ENEOS could accept orders only after Feb. 28 at its Chiba refinery in Tokyo Bay, according to a trader based in Japan. “February [bunker fuel] is sold out,” said a second bunker trader.
** Because of the earthquake that hit northeast Japan Feb. 13, operations at the crude distillation unit at ENEOS’ Sendai refinery and secondary units at ENEOS’ Negishi refinery were shut. This could lead to a reduction of fuel oil in March, market sources said.