Bunker fuel demand in Asia was likely to be mixed going into the near term despite a drop in flat prices, trade sources said Wednesday.
Demand in Singapore saw a slight uptick amid a gradual decline in flat prices in recent weeks, while more buying interest is expected to emerge Wednesday after the sharp drop in crude prices overnight, trade sources said.
“Singapore delivered [bunker] requirements look stable going into Q4, so buyers will emerge or retreat depending on flat price fluctuations day on day,” a Singapore bunker supplier said.
“Possible that more buyers would emerge today as Brent dropped so much overnight,” the supplier added.
ICE January Brent had settled $4.26/mt lower at $62.53/b Tuesday. The prompt-month Brent futures fell to levels last seen in November 2017.
Singapore 380 CST delivered bunker fuel prices were also lower in recent weeks, with prices averaging $490/mt over H1 November compared to an average of $502/mt over H2 October, S&P Global Platts data showed.
“But high bunker premiums lately could still keep buying cautious, with people buying only what they require,” a Singapore bunker trader said. In Shanghai, there was some caution among sellers about committing to bunker fuel sales due to the steep drop in prices amid falling crude oil values, a supplier said. “Buyers come out when prices drop a lot, and if prices drop further, they try to buy fixed price for delivery in future months like December, January or February,” a trader said.
In South Korea, market sources said. “Last week when crude dropped suddenly, demand for both term and spot orders surged. After that, demand dropped when crude went up again. This week, though crude is getting lower again, demand did not pick up,” one market watcher said.
However, there wasn’t any tangible impact on the Hong Kong market. “Demand is not affected, inquiries have not improved on a sluggish shipping market,” one supplier said.
“But the overall volume wouldn’t change, as long as the ships are still sailing and have the requirement to take bunker in Hong Kong,” the supplier added.
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