EUROPE AND AFRICA RESIDUAL AND MARINE FUEL: Key market indicators
7th March 2022 17:09 GMT

FOB Rotterdam 0.5%S marine fuel barges were assessed at $849/mt March 4, up $173.25/mt week on week.

Marine fuel 0.5%S

The premium for delivered 0.5%S marine fuel over barges at Rotterdam rose $4.75/mt week on week to $39/mt.

Stocks of fuel oil in the Amsterdam-Rotterdam-Antwerp region, as measured by Insights Global, rose 6.9% to 1.055 million mt in the week to March 3, after dropping 1.9% the previous week. This was the first time in four weeks that stocks had risen.

Fuel oil stocks in the region represented 20.9% of total refined oil product stocks in the region, higher than last week's percentage share of 20.8%. The four-week rolling average was 1.036 million mt.

On March 3, the 0.5% sulfur FOB Rotterdam barges were assessed at an all-time high of $711.25/mt. Although Russian refineries mostly export high sulfur fuel oil, the relative impact of the disruption in trade appears to have had a bigger impact on the already limited VLSFO pool. "0.5% sulfur is hard to get, especially with less stuff coming out of the Black Sea," one trader said.

In downstream bunker markets, demand for 0.5%S was up on the week as suppliers anticipate tight availability in the coming weeks following Russia’s invasion of Ukraine. With prices for 0.5%S seeing huge day-on-day increases across the week, prices for 0.5%S are at their highest since S&P Global Commodity Insights assessments began in July 2019. While some tightness is beginning to be felt in Europe as suppliers begin to cut ties with Russian companies, this has yet to transfer to Mediterranean markets.

With prices for all grades in ARA seeing huge day-on-day increases, prices for marine gasoil and 0.5%S in Rotterdam are at their highest since assessments began.

 

 

 

High sulfur fuel oil

 

FOB Rotterdam 3.5% fuel oil barges finished the week being assessed at $598.75/mt March 4, up $103.75/mt from the previous week.

The physical Hi-5 spread -- the differential between 0.5%S and 3.5%S fuel oils at Rotterdam -- climbed steadily in the week ended March 4, and was last assessed at $250.25/mt. It was last seen higher more than two years ago, immediately in the wake of the implementation of the IMO 2020 sulfur cap.

Demand for HSFO was up on the week across ports as prices continue to rise. While prices for HSFO are yet to reach their highest recorded price, they are at their highest level since 2013 in Rotterdam and 2012 in Gibraltar. While there has been some tightness on HSFO in the Mediterranean port of Las Palmas, this had not been reflected at other ports.

The differential between 0.5%S and 3.5%S fuel oil -- also known as the Hi-5 bunkers spread -- rose on the week by $72/mt to $266/mt at Rotterdam. The Capesize scrubber premium rose $1,442/day to $8,466/day during the same period.

 

 

Feedstocks

 

Feedstock traders had started searching for alternative supply as calls for a ban on Russian oil imports intensified. Sources said refineries in the Persian Gulf and Asia were seen as potential sources of feedstock material.

"Jazan is an alternative source but I honestly have no idea at the moment about what can be the solution to replacing the Russian barrels," one feedstock trader said. Saudi Arabia's Jazan refinery is in the process of starting up, and was running at half capacity in January.

Some sources said refineries in Europe will need to increase runs in their vacuum distillation units. That said, the market will have difficulty replacing the fallout from the missing Russian volumes because there was "nowhere else to get VGO from," according to a second trader.


Platts ,
7th March 2022 17:09 GMT