21-08-2018

Japan Bunker Market Braces Itself For Two Typhoons Amid Ongoing Barge Congestion

Japan’s bunker fuel market is bracing itself for the impact of two typhoons, which is forecast to make landfall later this week.

“Typhoon Soulik will hit west Japan on Wednesday-Thursday, and typhoon Cimaron will hit the entire Japan from Friday-Saturday,” a trader said.

The Japan Meteorological Agency at 0045 GMT Monday reported that typhoon Soulik, which it described as strong, was moving west at 15km/h with a maximum sustained wind speed of 40 meters/second, and maximum wind gusts of 60 meters/second. At 0105 GMT Monday, the agency said that typhoon Cimaron is moving north-westerly at 10km/h with a maximum sustained wind speed of 30 meters/second, and maximum wind gusts of 40 meters/second.

Demand has been strong in Japan this month following reports of quality issues detected in some Singapore high sulfur fuel oil cargoes, as Japanese refineries are self-sufficient in domestic production, and does not import any fuel oil cargoes.

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.

“Demand is very strong. Japanese shipping companies will choose to bunker at Japanese ports even though the price is higher than neighboring ports,” a trader said.

The surge in demand led to an ongoing barge congestion that has not eased, and which is expected to worsen with delivery delays due to the typhoons.

“Barge is still congested till end of this week, and bunkering dates have been narrowed [due to the typhoons],” the trader said.

Source: Platts

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