Bunker fuel demand at West African ports such as Lome and Dakar has been waning over recent months due mainly to high prices, sources said.
“WAF market is totally dead,” a local supplier said, adding that demand in the region had been weak since January.
There were mixed view among market participants over the reasons for the falling demand, with some buyers attributing it to high port prices.
“We are optimizing where to bunker and try to take as little as possible in WAF due to pricing,” one buyer said.
Prices have been high recently due to tight availability and rising ICE Brent and Gasoil futures.
“I think [bunker prices are] market reflecting — also tighter availabilities in WAF,” a buyer in the region said. A local supplier at the ports, however, said availability was fine.
Marine gasoil prices at Lome and Dakar hit multi-year highs towards the start of April and have been rising ever since.
S&P Global Platts assessed MGO at Lome Tuesday at $710/mt delivered and for Dakar at $705/mt ex-wharf, the highest respectively since October 2016, when the Lome MGO assessment began, and June 23, 2015.
Prices tailed off Wednesday with suppliers quoting down due to weak demand. MGO at Lome and Dakar was assessed at $705/mt delivered and $700/mt ex-wharf respectively.
Fuel oil 380 CST at Lome followed a similar trend, hitting an all-time high when it was assessed at $442/mt delivered on April 13, its highest since the assessment began in October 2016.
But other market sources suggest that the demand respite is temporary due to a quiet period in the fishing industry.
“There is a little bit of a [quiet period] in the fishing industry. Demand is not there,” a source said, noting this lull typically begins around Easter as fish populations are given a chance to recover.
Pserimos, a Suezmax, was heard to be loading April 23 from Ust-Luga, bound for West Africa, carrying fuel oil. Market sources expect this to not actually enter a port in the region, due to the cost, and believe is likely to be shipped to offshore, floating storage.
Lower crude exports from Angola recently could also be a contributing factor to the lack of bunker demand in the West African ports, with fewer ships required to take the crude away.
In particular, demand for West African crudes from the regular Asian consumer markets, India and China, have been weaker over the last month, sources said, with loading programs taking longer to clear.
This has pressured West African crude grades over the last month with price differentials for sweet heavy Angolan grades hit particularly hard of late, seen falling to 10 month lows.
Source: PlattsPrevious Next
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