Bunker fuel demand in Japan has increased as shipowners turn to Japan to refuel following a spike in South Korean bunker fuel prices amid supply tightness, market sources said.
Prices for delivered 380 CST bunker fuel had risen in South Korea on the back of tight supply, with most suppliers unable to offer for October delivery.
“It is super tight, starting from last week,” a trader said.
“Supply will be tight in Korea till the first week of November,” a South Korean supplier said.
The supplier was not offering bunker fuel at the Ulsan area due to a shortage of bunker fuel at the refinery.
“My cargo will arrive second week of November,” he added.
“We are only offering October for term, very little quantity,” another South Korean supplier said.
Due to the shortage of cargoes and the resulting steep premiums, buyers have turned to Japan.
“RMG demand in Japan is still strong due to Korean market and some [lingering] concerns about quality issue,” a Japan-based trader said.
Demand for Japan’s bunker fuel was buoyed in August and September due to a preference for Japanese bunker fuel among buyers following the fuel contamination scare in Singapore.
Japanese refineries are self-sufficient in domestic production, with the country not importing any fuel oil.
“Demand has been getting better since last week due to low stock at Korea’s refineries and higher prices than Japan,” another Japan-based trader said.
380 CST bunker fuel for delivery at Japan was assessed at $525.50/mt Tuesday, compared with $535/mt at South Korea.