COVID-related obstacles weigh on Asian demand for bunker fuel
Demand for monthly and quarterly HSFO futures is stable
Ports in India and Sri Lanka increase supplies of HSFO
Singapore’s bunker fuel sales for 380 CST HSFO grade fell to their lowest level in a year at the world’s largest bunker port in September due to limited cargo availability, while total volume Marine fuel sales also fell overall last month, reflecting weak bunker demand.
Receive daily email alerts, subscriber notes and personalize your experience.
Bunker fuel sales of 380 CST HSFO in the port city fell 7.1% in September to a one-year low of 908,000 t, according to the latest data from the Maritime and Port Authority , or MPA, of Singapore.
“Not all physical providers here [in Singapore] provide HSFO. Shipping bottlenecks and delayed shipping schedules of ships [in the Asian region] are also weighing on aggregate demand, ”said an industry source.
Singapore’s total marine fuel sales fell 3.4% month-on-month and 6.7% year-on-year in September to 3.935 million tonnes.
Sales of low sulfur marine diesel (0.1%) countered the overall downward trend, up 14.4% month-on-month to 331,700 mt, but down 8.6% on-l year, while marine diesel sales of 0.5% S increased 0.2% month on month. 26,800 mt, according to data from the AMP.
The tight supply of high sulfur fuel oil bunkers is expected to last through November, while the scarcity of cash availability has also supported premiums in delivered quality and diverted buyers from bunkering calls in Singapore, they said. indicated industry sources.
So far in October, premiums of 380 CST HSFO delivered to Singapore compared to FOB Singapore 380 CST HSFO freight valuations averaged $ 18.70 / mt through October 26, down from average September rate of $ 21.37 / mt but above the August average of $ 12.14 / mt, S&P Global Platts data showed.
“HSFO’s stocks were relatively tight from late August to September, so the contractual premiums at Singapore HSFO off-dock for October supply were removed,” said a Singapore-based bunker supplier.
“However, the bulk of the product is committed to supplying the monthly and quarterly contract buyers of 380 CST HSFO delivered to Singapore only for spot demand,” he added.
According to market sources, the latest contract supply term of Singapore ex-wharf 380 CST HSFO for the remainder of October was made at $ 10- $ 11 / mt compared to FOB Singapore 380 CST HSFO freight valuations at during the second half of October, down from the premiums of $ 14 to $ 18 / mt for the October offering inked between the end of September and the first half of October.
Initial talks for Singapore’s November futures supply ex-wharf 380 CST HSFO indicated bids at around $ 8 / mt, which also signaled a gradual easing of inventories, sources said.
“Although cash sales [of Singapore-delivered 380 CST HSFO] Declining, demand for monthly and quarterly futures remains stable as it is imperative that shipowners ensure a rapid supply of HSFO bunkers, ”said one trader.
Other ports increase supply of HSFO
Ports in neighboring India and Sri Lanka have seen a marked increase in inquiries and are trying to increase HSFO offers.
Indian firm Adani Bunkering said earlier this month it had started supplying high sulfur fuel oil to Mundra and other ports in Gujarat as the installation of washers on ships showed positive outlook after the international low sulfur mandate of the International Maritime Organization.
The price differential between HSFO and 0.5% S marine fuel, known as the Hi-5 differential, has also favored the use of scrubbers.
The current fleet of scrubbers is around 4,500, but if clean alternative fuels do not achieve adequate penetration by 2030, that number could reach nearly 7,000, Platts Analytics estimated recently.
In Singapore, the Hi-5 averaged $ 298.90 / mt in January 2020 as the market moved to the IMO 2020 mandate. It narrowed to an average of $ 60.32 / mt in September 2020, but declined increased to an average of $ 103.33 / mt in January 2021, according to data from Platts.
For most of 2021, the spread has averaged over $ 100 / mt on a monthly basis, but narrowed slightly to an average of $ 95.3 / mt from Oct.1 to 26, the data shows. by Platts.
In Sri Lanka, Advantis Bunkering has become the first supplier of HSFOs delivered to the Colombo port, banking on a long-term increase in call-outs for ships equipped with scrubbers, a company source said recently, with “multiple requests for information ”from the main shipping companies since the launch of the delivery. HSFO sales.
A physical bunker supplier with a substantial market share in the Colombo port also recently told Platts that a plan to offer delivered HSFOs was “currently under development”.
Meanwhile, the industry source noted that barge and operating costs in Singapore had increased “significantly” due to competition amid lukewarm demand for bunkers.
Charter rates are quite high now, he said. While HSFO at ports in India and Sri Lanka may still be more expensive, shipowners might still decide to refuel HSFO there, when looking at overall costs, he added.