Northwest Europe RMK 500 CST bunker fuel strengthens on exports east
An increase in fuel oil exports east from Rotterdam is supporting RMK 500 CST bunker fuel prices, as availability of the higher viscosity fuel tightens.
Traders are moving RMG 380 CST and RMK 500 CST fuel oil to Singapore from Northwest Europe to capture value from a firmer East-West spread — a measure of the openness of the arbitrage on the route.
The February HSFO East-West spread continued to strengthen, assessed at $27.5/mt Tuesday, 50 cents/mt up from Monday.
Rotterdam RMK 500 CST fuel was assessed at minus $4.00/mt against 3.5% FOB Rotterdam barges Tuesday — 25 cents/mt firmer than prices though most of January, according to Platts data — though some traders saw it stronger still at a discount of $3.00-$3.50/mt.
Singapore remains well supplied with low sulfur fuel oil, but supplies of high sulfur grades with higher viscosity are tighter.
This was reflected in the Singapore high sulfur fuel oil viscosity spread — the spread between the lower viscosity utility 180 CST HSFO grade and the higher viscosity bunker 380 CST HSFO grade — which remained narrow after reaching 1 cent/mt on January 11 — the lowest since S&P Global Platts started assessing 380 CST HSFO cargoes in January 1998.
“Singapore is tight because of a lack of barrels,” a source said Tuesday afternoon. “It’s fundamentally tight out there on RMG 380 CST and RMK.”
About 520,000 mt of high sulfur fuel oil has already been shipped from Rotterdam in January for discharge in Singapore. The VLCC Nave Buena Suerte is expected to arrive in Rotterdam January 24, according to Platts trade flow software, cFlow, to load about 270,000 mt of HSFO for discharge in Singapore.
In addition, the Aframax Sea Hope was heard on subjects for Clearlake to take fuel oil from Rotterdam Wednesday for discharge in Singapore, according to shipping sources.
Owners of large ships with engines capable of running this heavier, more viscous fuel tend to prefer it for its lower price compared with RMG fuel oil.
RMK is burned when sailing in open seas, as it does not meet the low sulfur content required in low emission zones such as the Emissions Control Area around Europe.