South Korea bunker supply tightens as SK Energy cuts production in May: sources
28th May 2021 10:41 GMT


South Korea's 0.5%S bunker fuel supply has tightened as the country's largest refiner SK Energy reduced production in May from its planned volume, market sources said this week.


SK Energy is likely to produce 120,000 mt of 0.5%S bunker fuel in May, compared with the original plan of 150,000 mt, a company source said, and down from 250,000 mt produced in April. The refiner's bunker production will stay at a similar level in June, a second company source said.

The refiner cut production as it raised run rates for secondary units to produce more lighter products, which dragged low sulfur fuel oil production lower, the company sources said. The run rates of crude distillation units have been around 60%-70%, the sources added.

The crack spread for Singapore gasoil and gasoline rose over April-May, while that of Singapore 0.5%S marine fuel has dropped in recent weeks due to oversupply, industry sources said.

Meanwhile, a bunker trader said SK Energy has cut its bunker fuel production in line with weakening demand.

South Korea's bunker demand has weakened as prices have been high in North Asia, sources said.

Some ships went to China, where 0.5%S bunker prices were lower. Also, when the ships’ route included both Japan and South Korea, the preference has been for bunker fuel from Japan due to lower prices, market sources said.

The delivered Zhoushan 0.5%S bunker price was $70/mt lower than South Korea on May 27, S&P Global Platts data showed, with South Korean 0.5%S marine fuel was assessed at $565/mt.

Meanwhile, other refiners have been supplying bunker fuel in May as planned, traders said.

Reflecting the supply tightness, South Korea's delivered bunker premium to Singapore 0.5%S marine fuel cargo rose to $86.19/mt on May 24, the highest since Oct. 14, 2019, when it stood at $94.02/mt, before edging down to $83.90/mt on May 27, Platts data showed.

Bunkerworld .,
28th May 2021 10:41 GMT