Recent quality issues detected in some Singapore high sulfur fuel oil cargoes have impacted the North Asia bunker market, pushing up premiums, market sources said Friday.
Singapore fuel testing company Maritec last Thursday said it had detected excessive sludge in a Singapore bunker fuel cargo that was likely of US or Estonian shale oil origin.
The contaminated oil clogs pipelines and damages the filters of a ship’s engine.
Singapore regularly ships fuel oil cargoes to Northeast Asia, where it is channeled mainly into the bunker fuel market. Singapore is typically one of the main suppliers of fuel oil to Hong Kong, South Korea and China, and a tight Singapore fuel oil market has pushed premiums higher in the region.
Suppliers and traders said shipowners have become extremely cautious about purchasing bunker fuel and have stopped buying from suppliers who do not declare their cargo source.
“Shipowners have been very concerned about fuel cargo source due to quality issues, as there have been ships which were adversely affected,” a trader said.
In China, supply tightness has persisted for a week and is expected to be further exacerbated by a lack of on-spec replenishment from Singapore.
The Shanghai 380 CST delivered bunker fuel premium to Mean of Platts Singapore 380 CST HSFO rose to $49.93/mt Thursday from $33.41/mt Monday.
The spike in premiums saw demand being diverted to South Korea, market sources said.
However, “offspec cargoes from the US have not only affected Singapore but Korea, as Korean refineries import cargoes mainly from Singapore or China. On spec fuel oil stock is very low, resulting in higher prices,” a South Korea-based source said.
The South Korea 380 CST delivered bunker fuel premium to MOPS 380 CST HSFO rose to $37.93/mt Thursday from $26.41/mt Monday.
In Hong Kong, a source said Thursday that a ship has reported damage after taking in bunker fuel that was delivered from Singapore.
“We are planning to do tests on phenols and styrene when we are loading cargo in Singapore,” a supplier source said.
The Hong Kong 380 CST delivered bunker fuel premium to MOPS 380 CST HSFO rose to $34.93/mt Thursday from $28.91/mt Monday.
Source: PlattsPrevious Next