Singapore HSFO differential near 6-month highs on tight supply, specification issues
25th March 2022 08:59 GMT

The Singapore high sulfur fuel oil cash differentials vs the MOPS strips for both 180 CST and 380 CST grades soared to near six-month highs amid tightening supply coupled with specification issues, S&P Global Commodity Insights data showed March 24.

The FOB Singapore 180 CST HSFO cash differential was assessed at $11.08/mt March 24, the highest since Sept. 30, 2021, when it was at $11.75/mt, and up 50 cents/mt day on day, S&P Global data showed.

The FOB Singapore 380 CST HSFO cash differential was assessed at $10.58/mt March 24, the highest since Sept. 27, 2021, when it was at $11.38/mt, rising 44 cents/mt from March 23, S&P Global data showed.

The cash differential shows the difference between HSFO cargo and swaps values, with wider ranges reflective of a stronger market and a narrowing range showing weakness.

Market sources expected high sulfur fuel oil inflow from the Middle East to decline as US refiners are taking cargoes there as an alternative to Russian fuel oil cargoes. The refiners are no longer buying Russian volumes due to the sanctions. Russian fuel oil typically contains relatively high sulfur of over 2%, market sources said. The Middle East is one of Asia's main sources of high sulfur fuel oil components.

Meanwhile, Pakistan, one of the major 180 CST buyers in Asia, recently bought HSFO, which also supported 180 CST market, said a fuel oil trader based in Singapore. Pakistan State Oil recently bought two 65,000-mt cargoes of 180 CST HSFO with maximum 3.5% sulfur for delivery in the first half of April from Vitol, S&P Global reported previously.


Bunker specification issues


Ongoing specification issues in high sulfur fuel oil are also driving the 380 CST bunker market higher, market sources said.

Bunker traders were cautious of buying off-spec cargoes, market sources said. As a result, trading activity of April ex-wharf 380 CST HSFO term contract cargoes was said to be muted amid fuel quality issues that capped available stockpiles for bunker use, according to Singapore-based traders.

"Ex-wharf buyers [of HSFO parcels] are holding off at the moment amid some quality issues. Albeit so, there is no HSFO shortages and some bunker suppliers are still able to deliver at prompt," a Singapore-based bunker supplier said.

Spot premiums of Singapore ex-wharf 380 CST HSFO against the benchmark FOB Singapore 380 CST HSFO cargo assessments rose to an over five-month high $8.65/mt March 24, up 43 cents/mt on the day, according to S&P Global data. The premium was last assessed higher at $9.42/mt Oct. 18, the data showed.

Bunkerworld ,
25th March 2022 08:59 GMT