06-02-2019

South Korea low sulfur marine gasoil supply still tight on strong demand after China’s 0.5% sulfur limit rule

The tight supply of low sulfur marine gasoil in South Korea continued into February, from January, on robust demand following the January 1, 2019 implementation of China’s 0.5% bunker fuel sulfur limit along its entire coastline.

Market sources said there has been a shift in demand from MGO to LSMGO following the emission regulations.
“The demand for MGO is like nothing nowadays, most of our customers take LSMGO,” a market source with one refiner said.

Vessels were understood to be taking LSMGO at South Korean ports before heading to China.

Supply was also short, with two refiners unable to offer the fuel in the spot market.

One of the refiners said the shortage was due to strong demand, coupled with the shortage of a blending component, which is necessary to lower the pour point in order to meet ISO’s winter specifications.

“Sales volume of LSMGO doubled from December to January, [and] we couldn’t even offer LSMGO for more than two weeks in January,” the refiner said.

Market sources said the earliest supply date is expected to be February 10-11 onwards.

“[The tight supply situation] should ease around mid-February; early February there will still be shortage,” a source said.

South Korea’s delivered LSMGO prices have surged 22.4% from $534/mt on January 2 to $653.50/mt on February 2, S&P Global Platts data showed.
Source: Platts

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