Weekly outlook: Asia Marine Fuel 0.5, HSFO
Expectations of sluggish demand for marine fuel for the foreseeable future, brought on by a slowdown in global trade due to the coronavirus pandemic amid ample supplies, was weighing on the Asian 0.5% sulfur marine fuel market at the start of the trading week.
MARINE FUEL 0.5%
**Reflecting overall bearish sentiment, the market structure at the front of the Marine Fuel 0.5%S swaps curve was trading deeper in the contango territory in mid-morning trade Monday.
**Singapore Marine Fuel 0.5%S May/June swaps spread, which was assessed at minus $8.5/mt at the Asian close Friday, was pegged lower at minus $9.5/mt in mid-morning trade, broking sources said.
**With around 10 million mt or so of low sulfur material currently stockpiled in landed tanks in Singapore and on floaters in and around Singapore, and with another 2.5 million-3 million mt of arbitrage product expected to arrive in Singapore for April, the market looked well-supplied for the near term, traders said.
**Market participants added that it is too early to predict whether demand for April will improve from March, as global macroeconomic uncertainty in light of the coronavirus pandemic continues to weigh on sentiment.
**While official bunker sales data for Singapore is expected to be announced by the Maritime and Port Authority of Singapore on April 13, market participants expect March sales to be at parity or slightly lower than in February, a shorter month.
**Singapore’s delivered Marine Fuel 0.5%S bunker premium to Singapore Marine Fuel 0.5%S cargo fell $1.20/mt or 4.6% on the day to $24.84/mt on Friday. The differential had touched a near 15-week low of $18.67/mt on March 13, Platts data showed.
HIGH SULFUR FUEL OIL
**The Asia high sulfur fuel oil market was trading steady to slightly higher in mid-morning trade Monday.
**A drop in overall supply as refiners switched to produce low sulfur marine fuels helped the market garner support, traders said.
**The market structure at the front of the 380 CST HSFO swaps curve was trading marginally higher in mid-morning trade. Singapore May/June 380 CST HSFO swap, which was assessed at a contango of minus $6.25/mt at the Asian close Friday was pegged higher at around minus $5.75/mt in mid-morning trade Monday, broking sources said.
**Crack spreads for 380 CST HSFO was also firm in mid-morning trade Monday. The May 380 CST HSFO swap spread to same-month Brent futures, which was assessed at minus $6.07/mt at the Asian close Friday, was pegged higher at minus $5.49/mt at 11 am Singapore time (0300 GMT).