Asia residual fuels: Key market indicators for Nov 15-19
15th November 2021 13:45 GMT

 

Sentiment in the Asian marine fuel 0.5%S market is strong for the Nov. 15-19 trading week amid a shortage of blending components. At 0200 GMT Nov. 15, the January ICE Brent futures contract was trading at $81.51/b, down from $82.40/b at the 0830 GMT Asian close Nov. 12.

 

 

Marine Fuel 0.5%

 

** Tighter supply of very low sulfur fuel oil stocks expected in late-November and December amid a shortage of blending components like Skikda straight-run fuel oil is fueling bullish sentiment in the Singapore marine fuel 0.5% cargo market, traders in the city-state said.

** Power companies in North Asia are expected to boost low sulfur fuel oil purchase in the near future to prepare for winter demand, which is also supporting the low sulfur fuel oil market.

** After receiving 322,760 mt of fuel oil from Algeria Aug. 5-Sept. 1, the city-state has since received 51,803 mt during Sept. 2-Nov. 10, Enterprise Singapore data showed.

** Partly as a result of tighter supply, the FOB Singapore marine fuel 0.5% cash differential rose to a 21-month high of $8/mt Nov. 12, according to S&P Global Platts data.

** In the delivered bunker market, high delivered premiums caused by barge tightness will likely send demand to Zhoushan in the Nov. 15-19 trading week.

** The widening backwardation and rising cash differentials in the Singapore marine fuel 0.5% market come despite less-than-anticipated demand for power generation cargoes from North Asia, with incremental Japanese demand for the winter "nominal," according to one Singapore-based fuel oil trader.

** Downstream delivered bunker market has been supported by terminal congestions. The congestions are expected to last throughout the rest of November due to heightened freight activity in Singapore, and are likely to keep Singapore-delivered marine fuel 0.5%S bunker premiums firm amid above-average demand despite ample availability of the grade, traders said.

** A Singapore-based bunker supplier said more shipowners are expected to divert bunker inquiries to Zhoushan because the "steep" premiums of Singapore-delivered marine fuel 0.5%S have widened the spread to prices of the delivered grade at the North Asian bunker hub.

** As the Chinese government issued the third batch of low sulfur fuel oil export quota, domestic bunker production in Zhoushan is expected to rise, market sources said. China's Ministry of Commerce on Nov. 10 allocated an additional 1 million mt of quota to Sinopec, PetroChina and CNOOC to export their domestically produced bunker fuel oil for bonded bunkering at China's ports in 2021, Platts reported previously.

** An uptick in prompt bunker inquiries at Fujairah keeps the marine fuel 0.5%S bunker premiums elevated, while ample supply of low sulfur fuel oil bunkers is "relatively balanced" against demand despite a slowdown of imported cargoes, market sources said.

 

High sulfur fuel oil

 

** Incremental supply of HSFO from the Middle East due to Kuwait Petroleum's shutdown of the atmospheric residue desulfurisation unit mid-October after a fire broke out is due to end, according to a company source. The company sold nearly 200,000 mt of HSFO in two parcels in the spot market.

** Both cargoes were sold to Vitol, Platts reported previously. KPC, which was previously importing HSFO cargoes to meet the country's domestic power demand needs, has begun consuming high sulfur fuel oil being produced at the Mina-al Ahmadi complex while the ARDS unit is still shut, the company source added.

** Supply of high sulfur bunker at Chinese ports is likely to remain tight as the arbitrage window from Singapore to China is shut. Bunkering ports across China have been experiencing supply tightness for the high sulfur grade, market sources said.

** A Fujairah-based bunker supplier said demand for delivered 380 CST HSFO in Fujairah has seen healthy levels so far in November, but some tightness in barge and cargo availability is expected to limit bunker sales.


Platts ,
15th November 2021 13:45 GMT