Sales of 700 CST delivered bunker fuel in Singapore not only reached a record high in May, but soared over January to May to astronomical levels not seen before, due to favorable pricing and availability of the high viscosity fuel, trade sources said this week.
The Maritime and Port Authority of Singapore data released last week showed that the sale of fuel classified under ‘Others’ reached 106,600 mt last month, compared with merely 200 mt a year ago and 50,000 mt in April.
Sales of 700 CST delivered bunker fuel from January to May amassed to 213,400 mt, compared with just 4,800 mt over the same period last year.
Fuel in this segment comprise marine fuel oil 30, 120, 280 and 700 CST, and low sulfur 700 CST. However, trade sources said the recent data reflected sales of high sulfur 700 CST bunker fuel, mostly to European container liners.
Maersk Oil Trading, which has been buying the high viscosity fuel in the city-port since last July, said it bought about 60,000 mt in May at a $2-$3/mt discount to Singapore 500 CST delivered bunker fuel, while a CMA-CGM source said it started buying the fuel in Singapore from March this year and purchased about 30,000 mt last month.
“The quality issue with 380 CST in April spilled over to May, which pushed the 380 CST premium up, and that could have lead to higher 700 CST sales,” the Maersk executive said.
He was referring to a spate of low flash, high catfines and water content issues, which afflicted the Singapore bunker market in April, sending the Singapore 380 CST delivered premium against the Mean of Platts Singapore high sulfur fuel oil 380 CST assessment to a record three-year high of $24.94/mt on April 25.
The premium averaged around $8.63/mt in April, before easing to $7.58/mt in May, S&P Global Platts data showed.
A Singapore bunker supplier who bought and sold about 10,000-15,000 mt of RMK 700 CST last month, said he did not see discounts of $2-$3/mt to Singapore delivered 500 CST, but transacted at a discount of about $1.50/mt in May.
A blender said he sold 700 CST delivered bunker fuel in the first quarter at a discount of $2/mt to Singapore 500 CST delivered bunker fuel, but said the discount should have narrowed to around $1/mt in the second quarter as there were less high viscosity material available, especially from the end-May.
Platts data showed that Singapore 500 CST delivered bunker fuel in May was $4.32/mt cheaper than Singapore delivered 380 CST bunker fuel, which meant that delivered RMK 700 CST in May was $5.82-$7.32/mt cheaper than 380 CST delivered bunkers.
Overall, the spread between Singapore delivered 500 CST and 380 CST from January to May was minus $4.47/mt compared to minus $4.04/mt over the same period last year, Platts data showed.
This meant that it was more favorable to buy the RMK 700 CST grade this year, especially since 700 CST bunker fuel is $1-$5/mt cheaper than 500 CST, trade sources said.
RECORD 500 CST DELIVERED BUNKER SALES
Additionally, sales of delivered 500 CST bunker fuel hit a record high of 1 million mt last month, up 9% month on month, and 17.9% year on year, MPA data showed.
Sales of the RMK 500 CST grade had averaged 940,300 mt in the first five months of this year, compared to last year’s monthly average of 837,800 mt.
“They might as well burn it, come 2020 it’s a dinosaur,” a cargo trader said.
He was referring to the International Maritime Organization’s measure to cap sulfur content in marine fuels at 0.5% globally from January 1, 2020, from 3.5% currently, which would render using high sulfur fuel, in the absence of an exhaust gas cleaning system, as non-compliant.
However, as 500 CST bunker fuel is usually sold on term contractual basis, most sellers did not see an increase in spot demand.
“We calculated that the major owners take around 800,000 mt/month, but I’m not sure where the other 200,000 mt came from,” a bunker supplier said. “We don’t see any new contracts to be honest,” he added.
However, a few sellers saw a pick up in demand this year.
“For us, it’s an extra one to two vessels more per month,” a trader said. “As for others, maybe it’s those 22,000 TEC new vessels entering into service taking the [500 CST] bunkers.”
Source: PlattsPrevious Next
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