SINGAPORE: Asian cash premiums for fuel oil were supported by spot demand from South Korea on Monday, traders said, but new regulations could crimp Chinese import demand.
Korea East-West Power Co sought a cargo for March on behalf of Ulsan Power Plant. Arbitrage cargoes from the west are expected to be lower in March compared with February.
In the longer term, Chinese demand for fuel oil is expected to fall after new regulations on Monday allowed smaller refining firms to import crude oil.
Independent oil refineries, known as "teapot refineries", have been importing lower-quality fuel oil for processing into gasoline and diesel, because they could not use crude oil as feedstock.
To qualify under the new rules, firms must have at least one crude distillation unit with an annual processing capacity above 2 million tonnes, or 40,000 bpd, must consume no more than 66 kilograms of standard oil for every tonne they refine, and must meet the latest local or national standards for their oil products, the NDRC said.
In other news, Dynamic Oil Trading (Singapore), a subsidiary of bankrupt ship fuel supplier OW Bunker, is owed $329 million and its liquidators said last week they are investigating dealings with Singapore-based marine fuel firm Tankoil Marine, which is its largest debtor.
Dynamic Oil Trading's largest secured creditor is ING Bank N.V. (ING) and the company has over 100 unsecured creditors to whom it owes an estimated $198 million, according to the statement.
The bankruptcy of OW Bunker, once the leading supplier of marine fuel oil with a 7 percent market share, is expected to have repercussions especially on smaller firms in Singapore, traders said.
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