Zhoushan delivered marine fuel 0.5%S premium over eleven-month high as competition eases
22nd December 2021 10:21 GMT

The Zhoushan-delivered marine fuel 0.5%S bunker premium against benchmark Singapore Marine Fuel 0.5%S cargo assessments rose to a near eleven-month high of $21.97/mt Dec. 21, Platts data showed, as local suppliers cutback competitive offers amid firm premiums in Singapore.

The premium was last higher at $22.10/mt on Jan. 6, the data showed.

“Zhoushan bunker suppliers are offering delivered low sulfur fuel oil at higher prices on expectations that the delivered premiums in Singapore would hold firm rather than soften anytime soon,” a Zhoushan-based bunker supplier said, adding that LSFO inventories remain healthy at Zhoushan.

Bunker demand at the North Asian bunker hub of Zhoushan has been “moderate at best”, amid a slowdown in shipping activity prior to the year-end festivities, market sources said.

“Even though [Singapore-delivered marine fuel 0.5%S] premiums are less competitive against Zhoushan due to tight cargo availability, we still see intense domestic competition to wrestle for market share in Zhoushan,” a second bunker supplier said.

The 2021 delivered LSFO bunker differential between Singapore and Zhoushan averaged 47 cents/mt through Dec. 21, up from an average of minus $5.06/mt in 2020, Platts data showed.

Margins from the delivery of LSFO bunkers in Zhoushan have been lackluster for most of this year, so some local bunker suppliers were heard to be diversifying into other bunker fuel mix, such as marine gasoil and high sulfur fuel oil, according to market sources.

“As opposed to the weak margins on trading low sulfur fuel oil bunkers, HSFO margins remains fairly reasonable. Moreover, the higher cargo premiums for low sulfur fuel oil also keep suppliers under pressure due to rising costs,” a Zhoushan-based trader said.

The trader also said that some bunker suppliers were less keen to compete on the LSFO front, gradually shifting their focus to supplying other bunker fuel grades.

China’s CEFC International has added HSFO bunkers to the mix of bunker fuel grades it is currently offering that comprises the International Maritime Organization-compliant grade and low sulfur marine gasoil, with a sulfur content of 0.1%, Platts reported on Dec. 16.

Platts ,
22nd December 2021 10:21 GMT