29-06-2017

Singapore Q3 ex-wharf 380 CST bunker fuel term contracts concluded at $4/mt premium

bunkerfu

Singapore ex-wharf 380 CST bunker fuel term contracts for the third quarter have mostly been concluded at premiums of around $4/mt to the Mean of Platts Singapore 380 CST high-sulfur fuel oil assessments, trade sources said this week.

This compares with the current-quarter term contracts concluded at premiums of around $1.5/mt to the MOPS 380 CST HSFO assessments.

The Q3 term prices were also heard concluded at a premium of $3.5/mt to the MOPS 380 CST HSFO assessments, but these were closed earlier in June, trade sources said.

Other traded levels heard were at plus $3.75/mt and plus $4.5/mt to the MOPS 380 CST HSFO assessments.

The spot ex-wharf 380 CST bunker differential to the MOPS 380 CST HSFO has tracked the rise in cash differentials for 380 CST fuel oil cargo from the end of May, amid a steady demand and lower arbitrage cargoes expected in July and August.

Trade sources have estimated fuel oil arbitrage cargoes for July at around 3 million, and at around 3.5 million mt for August.

"It's tight in the Middle East. Fuel oil from Iran, Iraq and Ruwais is straight-run and cannot go straight into the bunker pool, and has to be blended," said a trader.

Blending costs have also risen, said another trader.

"Slurry is expensive in Europe now, and the East-West spread has narrowed ... Since landed cost [in Singapore] is plus $3.5/mt, I don't think many will sell term at plus $3.75/mt," he said.

The cash differential for the mainstay 380 CST HSFO market climbed steadily from minus 66 cents/mt on May 31 to plus $2.34/mt on June 20, before easing to $2.08/mt on Tuesday.

Meanwhile, the spot 380 CST ex-wharf bunker fuel differential against MOPS 380 CST HSFO rose from $4.04/mt at the end of May to $5.24/mt a week ago, before slipping to $4.39/mt on Tuesday.

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

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

Source- Platts

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