Demand for 380 CST bunker fuel weak in North Asia, LSMGO remains firm

Post Lunar New Year sales of 380 CST bunker fuel in North Asia markets has dipped amid a lull in demand and on the recent bullish trend in crude prices, market sources said.

In China and Hong Kong, activity was slow to pick up post festivities, with traders reporting low inquiries during past two weeks.
“Fuel oil demand has slowed a lot compared to January,” a Hong Kong-based trader said.

“In China, every year activity slows in February due to seasonality, it gets better around April-May,” a China-based trader said.

A supplier estimated that daily volumes of delivered 380 CST bunker fuel has decreased by about 40%-50% month on month from January to February.

In South Korea, bunker fuel supply was ample with all four refiners offering competitively in the market amid lackluster demand.

“Shipowners said that crude is getting too high in a short time, hence they are waiting to see levels [stabilize],” a supplier source said.

On the other hand, demand for low sulfur marine gasoil held steady on emission regulations.

Since January 1, China imposed a 0.5% bunker fuel sulfur limit along its entire coastline for all vessels sailing within 12 nautical miles of the coast as well as when berthing.

“LSMGO demand increased a lot; for the entire China LSMGO volumes are about 100,000 mt/month currently. Last year it was about 30,000-40,000 mt/month,” the China-based trader said.

“LSMGO volumes are around 800 mt/day for us while last year it was 500 mt/day,” the Hong Kong-based trader said.

South Korea is also seeing an uptick in LSMGO demand as vessels going to China are lifting LSMGO at its ports. Currently, there is sufficient supply to meet demand.

“Demand is strong but supply can [accommodate],” an LSMGO supplier said.
Source: Platts