ENGINE: East of Suez Bunker Fuel Availability Outlook
Singapore’s very low sulphur fuel oil (VLSFO) bunker market has tightened this week, with lead times for stems going up by two days from last week to 12 days now. High sulphur 380 cst fuel oil (HSFO380) is also tight in the port, with lead times up by one day to 12-15 days. Bunker delivery schedules have filled up as bunker buyers booking stems to ensure deliveries ahead of the upcoming Lunar New Year celebrations from Friday. This has limited availability of prompt stems.
While Singapore’s bunker delivery schedules are tight, there was more fuel oil in storage in the bunker hub last week. Its fuel oil inventories rose to a two-week high of 21.37 million bbls, according to Enterprise Singapore data.
Singapore’s middle distillate stocks saw a moderate weekly increase of 1% on the week to stand at 14.15 million bbls. As with VLSFO, busy pre-holiday schedules have pushed up lead times for low sulphur marine gasoil (LSMGO) stems by one day from last week, to 5-7 days now.
Availability continues to be tight in Fujairah as well, with lead times for VLSFO and LSMGO stems stable on the week at six days. HSFO380 is tighter in the UAE port, requiring up to 11 days in advance. Fujairah’s fuel oil stocks rose last week, but are still lower than their weekly average for January.
Zhoushan’s lead times have gone up by three days this week, as most suppliers can deliver bunkers from 14 February onwards. Similarly, Busan’s earliest delivery date for bunker fuels currently stands at 15 February, as there will be limited operations and supply on 12-14 February due to the Lunar New Year holiday this week.
A South Korean supplier will start supplying HSFO380 again, as demand for the high-sulphur grade has been boosted from more vessels retrofitted with sulphur-abating scrubbers last year. Busan’s price spread between HSFO380 and VLSFO has gradually widened since late December. Last Friday, Busan’s sulphur spread widened to as much as $140/mt, rendering scrubber economics more attractive there than in other port, including Singapore.
HSFO380 stems have been in particularly tight supply in Japanese ports in recent weeks, pushing up price premiums for the fuel grade. Japan imported HSFO for the first time in several months when it took more than 500,000 bbls in the week to 30 January, data from Petroleum Association of Japan shows. The rare HSFO import came amid sharply lower domestic refinery production of the grade. A 20% drop in HSFO exports helped shore up inventory levels and keep them steady on the week.
VLSFO and LSMGO supply is also tight in Japan, with Tokyo’s earliest date now at 14-15 February. Some suppliers are tied up until 18-19 February. Japan did not import any low sulphur fuel oil for a second week in a row and its inventories declined by 4% to 4.48 million bbls.