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Singapore bunker premium to Zhoushan rise to all-time high on tight supply
3rd December 2021 11:23 GMT

 

Supply tightness in Singapore bunker market raised Singapore's bunker premium to China's Zhoushan bunker price to an all-time high on Dec. 2, S&P Global Platts data showed.

 

Zhoushan and Singapore typically compete with each other for bunker demand. Bunker prices at those ports typically hover at around similar level. Singapore is the world largest bunkering hub, while Zhoushan is China's largest bunker port, growing rapidly in the last few years.

The delivered Singapore marine fuel 0.5%S bunker was assessed $23/mt higher than that of Zhoushan on Dec. 2, the highest since Platts launched the Zhoushan assessment in July 2019. The last highest was $16/mt on April 19-20, according to Platts data.

The delivered Singapore marine fuel 0.5%S bunker was assessed at $596/mt, up $6/mt day on day, while that of Zhoushan was assessed at $573/mt, down $5/mt day on day, Platts data showed.

Market sources attributed the wider spread to supply tightness in Singapore, while Zhoushan bunker market remains relatively stable.

 

Strong Singapore market

 

The downstream low sulfur marine fuel market in Singapore has been gaining ground on the back of a strengthening upstream market.

The benchmark upstream marine fuel 0.5%S cargo premium to the Mean of Platts Singapore marine fuel 0.5%S assessments has soared to a near 22-month high of $22.6/mt on Dec. 2, on a tight availability situation for most part of December.

This has indeed had a cascading effect on the downstream Singapore marine fuel 0.5%S bunker market too, especially for product loading on an ex-wharf basis for December.

The premium for Singapore ex-wharf marine fuel 0.5%S bunker -- to Singapore marine fuel 0.5%S cargo -- rose 56 cents/mt day on day to $23.55/mt Dec. 2, a 19-month high. Singapore ex-wharf marine fuel 0.5%S bunker premium was last assessed higher at $28.08/mt on April 30, 2020, Platts data showed.

Tight product availability, especially in the first half of December, had led sellers of both Singapore ex-wharf and delivered marine fuel 0.5%S bunker to refrain from offering down to attract buying interest.

This was particularly the case in the ex-wharf market, where only very few sellers had oil to offer to the spot market for first half loading. The few suppliers with oil in the recent days have been offering Singapore ex-wharf marine fuel 0.5%S at a premium of around $30/mt, if not higher.

This compares with a premium of $10-$11/mt at which sellers were offering product on an ex-wharf basis for balance month dates going in to the second half of November.

An optimistic sentiment was also helping drive the sentiment on the delivered side of the end-user bunker market too.

The premium for Singapore-delivered marine fuel 0.5%S bunker over Singapore marine fuel 0.5%S cargo assessment rose 56 cents/mt day on day to $28.55/mt, a near 18-month high. Singapore-delivered marine fuel 0.5%S bunker premium was last assessed higher at $28.59/mt on June 17, 2020, data showed.

 

Zhoushan remains stable

 

Meanwhile, Zhoushan bunker market has been stable with sufficient supply while demand remains normal, fuel oil traders and bunker suppliers said.

"Zhoushan seldom imports fuel oil cargoes from Singapore, so it is not impacted by the situation in Singapore. Supply is enough," said a bunker supplier in Zhoushan.

"I don't think [there is] any problem. Export quota is still there. Chinese refines still have some balance [in export quota]. If they want, they can produce low sulfur fuel oil any time," said fuel oil trader.

Bunker demand in Zhoushan has been stable although strong winds suspended bunkering operations over Nov. 29-Dec. 1. "The rough weather passed in a short while. And weather becomes rough every month," said a second bunker supplier in Zhoushan.


Bunkerworld .,
3rd December 2021 11:23 GMT