Asia residual fuel market - Key market indicators this week
11th January 2021 11:19 GMT

The Singapore Marine fuel 0.5%S market witnessed tepid downstream bunker demand in the first trading week of 2021, although bunker traders have pegged their hopes on a demand recovery for the second half of the month.

Asian high sulfur fuel oil has seen incremental power sector demand from Kuwait and Sri Lanka on account of refinery works, which has marginally offset the estimations of increasing HSFO supply on account of more Middle Eastern volumes.

MARINE FUEL 0.5% SULFUR

** The Singapore Marine Fuel 0.5%S February-March backwardation Jan. 11 widened to $2.25/mt from the Jan. 8 assessment of $1.85/mt, with bids seen at $1.50/mt against no offers, Intercontinental Exchange and brokers' data showed.

** After finishing the first trading week of the year, which was characterized by thin demand for marine fuel 0.5%S across major Asian bunkering hubs of Singapore and Fujairah, traders were more hopeful of demand picking up for product deliverable in the second half of the month.

** The increase in crude oil markers led sellers to make determined offers in a bid to attract buying interest. As such the premium for Singapore-delivered marine fuel 0.5%S bunker over FOB Singapore marine fuel 0.5%S cargo has tapered for the last four consecutive trading sessions to be assessed at $10.63/mt on Jan. 8, a 20-week low, Platts data showed.

** In North Asia, the South Korean bunker market is expected to see supply tightness amid refiners' run cuts. Despite Asian refining margins having improved in recent months, South Korean refiners remain reluctant to raise their run rates, traders said.

** The Japanese Marine Fuel 0.5%S market is tightening as a cold snap hit the country. Delays in the arrival of LNG cargoes have lent support to the market as well, market sources said. As a result, power utilities have boosted their fuel oil purchases, limiting supply of fuel oil to the bunker market.

** In contrast, the bunker markets in Shanghai/Zhoushan and Hong Kong are expected to remain well supplied as supply in these ports are stable, sources said.

HIGH SULFUR FUEL OIL

** According to brokers' indications and ICE data, the Singapore 380 CST high sulfur fuel oil February-March spread was notionally pegged at 25 cents/mt Jan 11, narrower than the Jan. 8 assessment of 40 cents/mt.

** While most countries in the Middle East and South Asia have been reducing their fuel oil imports to meet power sector demand on account of the lower consumption during winter, Kuwait's KPC is likely to look for a rare third cargo of high sulfur fuel oil for delivery at the end of January, a company source said.

** Upgrading work at the Mina Abdullah refinery has led KPC to import at least 160,000 mt of HSFO by mid-January, with the possibility of more imports if the secondary units remain offline for a longer period, the source added.

** The company is typically an exporter of HSFO and fuel oil blending components, but has not exported any volumes since mid-December.

** Sri Lanka has increased its purchase of medium sulfur 180 CST fuel oil by issuing a quarterly term contract seeking 90,000 mt of the product for delivery over the period its refinery is shut to meet its domestic power requirements.

** India's IOC is likely to seek a third 180 CST HSFO cargo for delivery over the end of January as its refinery run rates remain low due to weaker refined products demand in India, a company source said.

** The Singapore 180 CST HSFO swap spread to front-month Dubai crude swap rose to minus $2.49/b on Jan. 8, up from minus $2.76/b on Dec. 31, Platts data showed.


Bunkerworld .,
11th January 2021 11:19 GMT