Singapore marine fuel market garners support on Hin Leong debacle
Singapore marine fuels market has firmed up and is expected to continue to garner support in the near term as suppliers vie to fill the void left behind by a spate of bunker delivery cancellations set off by Ocean Bunkering Services, the bunkering arm of embattled oil trader Hin Leong Trading Pte. Ltd.
Singapore-delivered Marine Fuel 0.5% bunker premium to the benchmark Singapore Marine Fuel 0.5% cargo has firmed up to $12.50/mt at the Asian close on Monday, up by around 69% from an all-time low of $7.39/mt on April 9, Platts data showed.
Cancellations by OBS had led to an increase in bunker inquiries in the spot market since last week, suppliers and traders said.
“Inquiries have been increasing since middle of last week and I expect this to continue this week because [OBS] stopped delivery, so all these pending orders have to be fulfilled by replacement suppliers,” a Singapore-based bunker trader said.
OBS has cancelled all marine fuel deliveries from April 18, S&P Global Platts reported on April 17, quoting the company’s counterparties and traders.
Hin Leong and OBS did not respond to S&P Global Platts’ request for comments on Monday.
The recent rise in the premium for the mainstay Marine Fuel 0.5%S bunker was despite current ample availability, traders added.
“There is definitely enough supply in the market, but traders will try and squeeze for higher premiums,” another Singapore-based bunker trader said.
HIGH-SULFUR BUNKER PREMIUMS TO GAIN
There has been an uptick in spot inquiries for erstwhile mainstay Singapore-delivered 380 CST high sulfur bunker fuel too, traders said.
Since most of the demand for this product, which now accounts for only around 15% of the overall market, has however been tied up via term contracts, there are only a few suppliers that can offer against spot inquires, thus resulting in a spike in premium, traders said.
Singapore-delivered 380 CST bunker premium to Singapore 380 CST HSFO cargo has surged by around 117% from a six-week low of $12.24/mt on April 6 to $26.59/mt on Monday, Platts data showed.
“It has become a niche market, so buyers who need it would have gotten themselves covered with term volumes for at least the first half of this year or even for the whole calendar year,” a trader said about demand for 380 CST high sulfur bunker. He added that the premium, especially for this product, could remain firm in the near term.
BARGE COSTS LIKELY TO RISE ON TIGHT AVAILABILITY
Meanwhile, some suppliers have also expressed concern that the market could see tight barge availability in the coming weeks as the 14 barges operated by OBS have been taken off service.
Barging cost, which typically range between $8/mt and $10/mt in Singapore, has yet to increase, traders said.
“It may increase for a short period of time,” a third bunker trader said.
Meanwhile, most market participants did not expect the Singapore marine fuels market to be significantly impacted in the near to medium term due to ample availability, coupled with lackluster demand due to the coronavirus pandemic.
“Demand was pretty weak from March till now and shipowners have been buying only the bare minimum because of the coronavirus pandemic. OBS’ cancellations will probably only affect the market for a short period of time,” the third trader said.
According to the Maritime and Ports Authority of Singapore, OBS was the country’s third biggest bunker supplier by volume in 2019. It accounted for 500,000-700,000 mt/month of bunker fuel sales in the world’s largest bunkering port, which sees average sales of about 4 million mt/month.