Weak premiums in the Singapore ex-wharf and delivered bunker markets are expected to weigh on marine fuel 0.5%S cargo prices in the week of Sept. 13-17, sources said.
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The Asian high sulfur fuel oil market was likely to stay firm, due to an ongoing switch from LNG to HSFO at power plants, sources said.
Marine fuel 0.5%S
** The premiums for the Singapore ex-wharf marine fuel 0.5%S bunker are expected to soften over Sept. 13-17, due to higher low sulfur fuel oil inventories, as bunker suppliers struggle to retain delivery margins because of a narrow differential between the Singapore-delivered marine fuel 0.5%S and ex-wharf, sources said.
** Singapore marine fuel 0.5%S cargo prices weakened as Singapore’s residue stocks jumped 16.7% to 24.148 million barrels, or 3.8 million mt, in the week ended Sept. 8, reaching their highest level since July 21, the latest data from Enterprise Singapore showed. The Singapore marine fuel 0.5%S cash differential fell to $2.69/mt Sept. 10, its lowest since Aug. 19, S&P Global Platts data showed. Singapore is likely to receive similar-to-slightly higher arbitrage cargoes in October, compared with September, a fuel oil trader.
** In North Asia, bunkering operations were disrupted due to Typhoon Chanthu hitting the Zhejiang province over Sept. 10-11, halting operations at key ports, such as, Shanghai and Zhoushan, sources told Platts Sept. 13.
Bunkering operations at the ports were suspended from the evening of Sept. 10 and are expected to remain shut until Sept. 15, according to sources. Demand for the remainder of the week is expected to be dull as shipowners secure bunkering activities elsewhere, a supplier said. The typhoon is expected to hit South Korea later in the week over Sept. 13-17, hurting demand in the market the following week, sources said.
** Reduced vessel callings at the port of Fujairah during the week ended Sept. 10 had resulted in the lackluster demand for very low sulfur fuel oil bunkers, and bumped up inventories, traders said.
** The Asian high sulfur fuel oil supply is expected to remain tight Sept. 13-17, as LNG prices continue to trade at premiums to HSFO, market sources said. The Platts JKM — Asian LNG benchmark rose to $20.518/MMBtu Sept. 10, the highest since Jan. 15, when it was assessed at $26.99/MMBtu, Platts data showed. Singapore 180 CST HSFO cargo was assessed at $461.12/mt Sept. 10, or about $11-$12/MMBtu. The Asian HSFO supply has tightened as countries including Pakistan and Bangladesh shift to HSFO from LNG, due to high gas prices, Platts reported earlier.
** Middle Eastern countries, such as, Kuwait and Saudi Arabia, continuing HSFO purchases to meet electricity demand, was also likely to support the market, sources said. The 380 CST cash differential rose to $15.25/mt Sept. 10, the highest since Jan. 6, 2020, Platts data showed.
** Tight HSFO supply in Singapore had bolstered ex-wharf premiums, with HSFO inventories expected to be in short supply in October, and until the Middle East eases its buying appetite, industry sources said.
** The term contracts of Singapore ex-wharf marine fuel 0.5% for balance September dates were heard concluded at premiums of $12-$14/mt over FOB Singapore 380 CST HSFO cargo assessments early-September, up from premiums of $10-$11/mt late-August for September’s supply, sources said.
** The HSFO supply was also tight in North Asia, particularly in Hong Kong and South Korea, sources said. Hong Kong-delivered 380 CST premium to FOB Singapore 380 CST cargo hit an 11-month high of $37.75/mt Sept. 10. Premiums for South Korea-delivered 380 CST also rose over the past week, averaging $40.50/mt in the week ended Sept. 10, up from an average of $25.03/mt in the week ended Sept. 3, Platts data showed.