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Bunker demand slump pushes South Korea’s sole HSFO producer to export

South Korea’s sole producer of high sulfur fuel oil for the domestic bunker market has resorted to seeking export outlets for its output amid an unprecedented drop in demand in recent weeks due to the coronavirus outbreak, market sources said.

GS Caltex, the only one of South Korea’s four refiners to produce HSFO to meet domestic bunker demand, has sold an MR-sized HSFO cargo to a Chinese buyer, a company source confirmed Thursday.

“We sold last week — suddenly the demand has dropped, so we had to export,” the source added.

Besides China, South Korea has been one of the hardest hit bunker markets in North Asia due to the coronavirus outbreak, which has impeded vessel calls to ports in the region.

Bunker demand at the South Korean ports of Ulsan and Busan has progressively dropped from an average of around 20,000 mt/day in January to around 10,000 mt/day to date in March, traders said.

“We were expecting to do [sales of] about 200,000 mt in March, but I think we can only do about 150,000 mt. Last month our expectation was to do about 250,000 mt, but ended up with 200,000 mt,” a Seoul-based trader at one of South Korea’s largest refiners said.

Bunker demand at major North Asian bunkering hubs like Ulsan and Busan, Tokyo Bay and Hong Kong fell more than 20% in February from the month before, traders said. Bunker demand in China, which typically sees sales of around 1 million mt/month, is said to have dropped well over 30% month on month in February, with some suppliers reporting sales had nosedived almost 50%.

Hyundai Oilbank is the only other refiner in South Korea said to have physical length in the high sulfur bunker fuel market, but the company imports just about enough volume to meet its term commitments and rarely offers against inquiries in the spot market, traders said.
Source: Platts

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