24-06-2016

Singapore Q3 ex-wharf 380 CST bunker fuel term inked at $0.25-$0.5/mt discount

Bunkerfuel

Singapore ex-wharf 380 CST bunker fuel term contracts for the third quarter of 2016 have mostly been concluded at discounts of $0.25-$0.5/mt to Mean of Platts Singapore 380 CST high sulfur fuel oil assessments, trade sources said this week.

This compares with current quarter term contracts concluded at premiums of $0.5-$1/mt to MOPS 380 CST HSFO assessments.

“Depending on when the deal was concluded, I reckon Q3 terms have been done in the flat to minus $1/mt range. But I don’t think there is much that has been done closer to the minus $1/mt level, so I’d say a fair share of [Q3 term] volumes has been done in the flat to minus $0.5/mt range,” said a trader.

“I had heard some [Q3 terms] were concluded around the minus $1/mt level, so I wanted to buy at that level, but I don’t find an offer there now. I don’t know how the market can be so discounted when [July Western] arbitrage is said to be so low,” said another trader.

Incoming fuel oil cargoes from the West into Singapore for July are expected to hit a record low of under 3 million mt, S&P Global Platts reported Tuesday quoting trade sources.

“We have not done any Q3 term because we do not want to term at a discount that bunker buyers are asking for,” said a bunker supplier.

The market has generally seen waning interest, especially on the part of buyers of ex-wharf 380 CST, to term up volumes, as they would rather buy on a spot basis, said trade sources.

Term contracts for ex-wharf 380 CST bunker fuel in the second quarter were inked at premiums of between $0.5/mt and $1/mt. With just one week of trading left to close the current quarter, the spot daily ex-wharf 380 CST bunker differential to MOPS 380 CST HSFO has, however, averaged at a premium of just 2 cents/mt, Platts data showed.

Still, a firming ex-wharf 380 CST bunker fuel differential to MOPS 380 CST HSFO since the start of the month has renewed interest among ex-wharf buyers to term up volumes for the next quarter, said trade sources.

The spot daily ex-wharf 380 CST bunker fuel differential to MOPS 380 CST HSFO has tracked the rise in the cash differential for 380 CST HSFO since early June.

The cash differential for 380 CST HSFO firmed up from a three-month low — of minus $4.38/mt — to be assessed at minus $2.23/mt Wednesday, while the spot daily ex-wharf 380 CST bunker differential to MOPS 380 CST HSFO inched up from a discount of $1.87/mt to a premium of 52 cents/mt during the same period, data showed.

Premiums or discounts for physical bunker fuel reflect prices buyers are willing to pay relative to published benchmark values.

Cash differentials for physical fuel oil represent the price buyers are willing to pay for the oil over and above benchmark values published around the day a cargo loads.

A firming cash differential indicates growing appetite from buyers and is typically accompanied by a strengthening in the structure of the forward curve.

Source:  Platts 

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