Mumbai-Colombo bunker fuel price spread widens to 15-month high on ample supply
The price spread between Mumbai and Colombo delivered 380 CST bunker fuel widened to a 15-month high of $35/mt Thursday, and is likely to remain at this peak in the near term due to ample supply in Colombo, according to S&P Global Platts data and trading sources.
“There are a lot of cargoes in the market now and people are trying to clear stocks,” a Colombo-based bunker fuel trader said.
The price spread between Mumbai and Colombo delivered 380 CST bunker fuel averaged at $28/mt for December to date, widening sharply from an average of $1/mt seen in November, Platts data showed.
Since last week, Mumbai prices have been at a premium of $35/mt over Colombo, the data showed.
The current price disparity between the two markets could persist into early 2019, the sources added.
While aggressive selling in Colombo had dampened prices, steady domestic demand in Mumbai had in turn provided support.
“We are still seeing very steady volumes for domestic consumption, so there is no need to cut prices to boost sales,” a Mumbai-based bunker fuel trader said.
Barge availability in Mumbai was also slightly tighter in recent days, though bunker fuel supply is fine, another Mumbai-based bunker fuel trader said.
Bunker fuel prices in Mumbai have been typically higher than Colombo due to the goods and services tax regime introduced in India in 2017.
Ports such as Colombo and Trincomalee in Sri Lanka have benefited following the implementation of GST in India, as some price-sensitive buyers switched to calling at ports away from Mumbai for bunker fuel.
Platts assessed delivered 380 CST bunker fuel prices at $475/mt in Mumbai and $440/mt in Colombo Thursday.