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Zhoushan LSFO premiums sink to six-month low amid selling pressure, rising supplies

Premiums for Zhoushan-delivered 0.5%S bunker over FOB Singapore marine fuel 0.5% cargo values sank to a six-month low of $4.26/mt on Jan. 20, pressured by greater selling interest to clear ample volumes ahead of China’s Lunar New Year holidays next week and before the seasonally weaker February arrives.

The differential was last lower on July 9, 2024, when it dipped to discount of $3.26/mt, S&P Global Commodity Insights data showed.

“Right now [it’s] very competitive to get more deals before the holidays, otherwise the long holiday will affect volumes. During the [Lunar New Year] period, [local] customs will be closed, so [we] can’t take any orders then,” a local bunker supplier said.

Offers for LSFO were heard in the $586-$600/mt range, with delivery dates in the Jan. 23-27 range. Platts assessed the grade at $593/mt Jan. 20, down $2/mt on the day.

In a sign of increasing selling pressure and improved supply dynamics from a much-tighter fourth quarter of 2024, some suppliers were heard fixed at a discount to the Mean of Platts Singapore (MOPS). LSFO parcels were heard traded as low as $580/mt, for delivery Jan. 31.

This comes as some suppliers have likely more balance-month volumes to clear ahead of the holidays from Jan. 28-Feb. 4 and amid expectations of a weaker market in February.

The dive in premiums also comes amid ample supplies in the market in January after a supply squeeze towards the end of 2024.

A supplier had indicated that much higher volumes were allocated for Zhoushan and Shanghai in January compared with December, as some suppliers faced a supply crunch after depleting fuel oil export quotas for bonded bunker sales towards the year end.

Supply levels are expected to normalize further as replenishment cargoes from local refineries come into the market progressively given the fresh batch of export quotas released late December.

“February is seasonally lower in the year, and the peace talks between Israel and Hamas will release more tonnages, which will dilute demand,” a local ship charterer said.

Barging availability was heard largely normal ahead of the holidays.

“I don’t foresee any barging issues but mostly on price movements and weather [conditions],” the same ship charterer added.

Regional competition heats up
Traders foresee persistent competition for LSFO demand across regional hubs for rest of 2025, as the recent release of bonded fuel export quotas enabled suppliers to offer more aggressively and price offers closer to, or below, offers around the world’s largest bunker hub of Singapore.

Spreads between Zhoushan’s delivered marine fuel 0.5%S bunker prices versus the same delivered grade in Singapore flipped into a discount for the first time on Jan. 14 since early-September 2024, and was assessed $2/mt wider on day at minus $10/mt Jan. 20.

This spread was last assessed lower at minus $15/mt Sep. 5, 2024, gradually narrowing to average $1.31/mt Jan. 1-20, significantly narrowed from $26.43/mt in December and $17.62/mt across November.

Around Singapore hub, LSFO supplies were seen likely ample for the rest of January, whereas recent demand flows have sometimes lagged initially stronger expectations ahead of the festive holidays.

In Singapore, although some of the physical suppliers have already committed barging schedules towards end-January, other players have most recently been still offering out spot basis for prompt refueling requirements within two to eight days out.

Zhoushan port’s bonded bunker fuel sales topped a milestone high of 7.27 million mt in 2024, a 3.2% increase on year, Commodity Insights previously reported.

In December 2024, bonded bunker sales also touched a record monthly high of around 714,751 mt, a 42.8% jump year on year and 9% up month on month.
Source: Platts

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