SINGAPORE: Cash differentials for cargoes of Asia’s 0.5% very low-sulphur fuel oil (VLSFO) and 380-cst high-sulphur fuel oil (HSFO) dropped to new lows as ample supplies and sluggish demand weighed on the residual fuel markets.
The VLSFO cash discount was at its widest in more than eight-months at $2.55 a tonne to Singapore quotes while the 380-cst HSFO differential was at a nearly 11-month low of minus $1.88 per tonne.
Bunker demand at the Singapore bunkering hub has lagged in recent weeks, trader sources said, despite official data showing firm bunker sales volumes in April.
Market sentiment was also weighed down by sluggish demand from regional and Middle Eastern utilities, the sources said.
Official data last week showed onshore Singapore residual fuel inventories were at 26.4 million barrels, or 3.9 million tonnes, in the week to May 11.
While the fuel oil stocks were 3% lower than the week before, they were well above the 2021 weekly average of 22.8 million barrels and 23.8 million barrels average in 2020.
Volumes of marine fuel sales in Singapore rose 1% in April to a three-month high of 4.26 million tonnes, and were up 3% from the same period last year, the latest official data showed.
Sales of marine fuels in Singapore, the world’s top bunkering hub, were buoyed by a surge in global demand for goods and raw materials that has sent dry bulk and container freight rates to record highs.
The outlook for near-term bunker sales, however, remains mixed as industry participants weigh signs of cooling dry bulk shipping demand amid a renewed spike in coronavirus infections against significant speed increases in the container sector as box ships struggle to keep up with demand.
The higher bunker volumes were led by a jump in year-on-year sales of HSFO that totalled 1.09 million tonnes in April, up 41% from last year and 10% up from March, as more ships fitted with scrubbers, or exhaust cleaning systems that allow them to burn fuels with sulphur content in excess of the global 0.5% limit, joined the global fleet.
HSFO volumes represented 26% of April’s overall bunker sales, the highest since the global sulphur cap was introduced at the start of 2020.
Sri Lanka’s Ceypetco in an unusual move has offered up to 25,000 tonnes of fuel oil with a 85-cst to 175-cst viscosity and a maximum 2% sulphur content loading from Colombo over June 19-20 in a tender closing on May 20 with three days validity.
Ceypetco, typically an importer of fuel oil, recently cancelled a tender to import a 30,000 tonne fuel oil cargo for June 10-11 delivery as ample hydroelectric power supply curbed domestic demand for oil from utilities.
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