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Singapore ex-wharf HSFO bunker premium sinks further to four-month low ahead of IMO 2020

The Singapore ex-wharf premium for 380 CST high sulfur bunker fuel extended its downtrend to a four-month low at Asian close Thursday, S&P Global Platts data showed.

This comes at a time when demand shifts rapidly to cleaner fuels away from higher sulfur grades, as the IMO 2020 sulfur mandate looms.

The ex-wharf 380 CST bunker premium to the Mean of Platts Singapore 380 CST high sulfur fuel oil assessment fell to $15.08/mt at Thursday’s Asian close, it was last lower at $11.84/mt on July 4, Platts data showed.

“There is no more demand for 380 CST [HSFO bunkers] on the ex-wharf side, mainly because most delivered bunker demand is now shifting to lower sulfur fuel,” a Singapore-based fuel oil and bunkering source said.

The downtrend for ex-wharf bunker premiums began more apparent since the start of November, the month in which most market participants expected demand to swing sharply towards low sulfur fuels.

Delivered bunker premiums also trended lower but its decrease was capped by tight barges and limited supply for prompt delivery, sources added.

“Nowadays ex-wharf and delivered prices can be worlds apart, even at a 30-dollars difference,” another bunker trader based in Singapore said.

The Singapore delivered versus ex-wharf 380 CST bunker fuel spread averaged $29/mt in November so far, almost doubling compared to an average of $16/mt seen in October, Platts data showed.

The downtrend in the ex-wharf premium mirrors the trend in the high sulfur 380 CST fuel cash differential, which has weakened since early November.

The cash differential was assessed at $30.38/mt on November 1 but dropped to $2.26/mt at Thursday’s close, Platts data showed.

“[The market] is in the middle of the transition [to IMO 2020]…I think 20% of the demand has shifted to low sulfur fuel in October, and 80% would have changed in December,” said a fuel oil trader based in Singapore.
Source: Platts

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