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South Korean 380 CST bunker premium hits 10-year high on tight supply

Tight supply for November deliveries pushed the spread between South Korean delivered 380 CST bunker fuel and Mean of Platts Singapore 380 CST high sulfur fuel oil assessments to a 10-year high at $74.46/mt Monday, S&P Global Platts data showed.

It was last higher at $84.27/mt on November 5, 2008.

Market sources attributed the tightness to suppliers having sold most of their availabilities earlier in the month.

“It is tight for November as only two suppliers [are able to] offer for November delivery,” a supplier said Monday.

Supply for November has been tight as S-Oil had exported high sulfur fuel oil cargoes during the month and had limited availability left for the bunker market.

“The whole month average for November is $30-40/mt higher than December,” a trader said.

South Korean refiners typically quote a premium over the whole month average for bunker fuel supply.

“We are still seeing inquiries for November delivery, which is exceeding December delivery requirements as of now. There is a heavy backwardation from November to December,” the trader said Tuesday.

Market watchers expect supply in December to be tight as well.

“The backwardation should continue in December; the market is too tight due to a shortage of HSFO and bunker fuel in the region,” another supplier said.

Source: Platts

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