SINGAPORE: Cash premiums for Asia’s high-sulphur fuel oil (HSFO) dipped on Tuesday, ending a recent surge in cash differentials for cargoes of both 180-cst and 380-cst HSFO as buying interest waned. Cash premiums for 180-cst HSFO dipped 24 cents to $2.26 a tonne to Singapore quotes on Tuesday, while cash premiums for 380-cst HSFO were at $1.33 a tonne, down 32 cents from the previous session.
Both HSFO differentials hit over three-month high on Monday as bidding for cargoes of the fuel grades surged from Friday in the Singapore pricing window.
Weaker 380-cst HSFO forward prices relative to those of 0.5% very low-sulphur fuel oil (VLSFO) helped push the sulphur spread, also known as the HiLo spread, for August to a more than four-month high of $124.50 a tonne, Refinitiv data in Eikon showed.
Vitol bought a 20,000-tonne 180-cst HSFO cargo from Glencore at a $2 per tonne premium to Singapore quotes. No VLSFO cargo trades were reported in the Singapore trading window. Please click on for more details.
Taiwan’s CPC is seeking up 40,000 tonnes of 30-cst to 350-cst fuel oil with a maximum 0.3% sulphur content for delivery on a cost-and-freight (CFR) basis into Keelung in August in a tender closing on July 7 with a two day validity.
Taiwan’s Formosa sold a 10,000 tonne 35-cst pyrolysis fuel oil cargo with a maximum 0.15% sulphur content loading from Mailiao over July 17-19 to Shell at an unknown price level.
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Soaring gas prices are prompting some utilities to consider switching to alternative feedstock options, analysts and trade sources said.
Global gas prices have jumped to multi-year highs over the past month, with high temperatures driving demand for power generation in the northern hemisphere for air conditioning and as some regions including Asia seek to boost stocks before winter.
“That LNG prices would surpass HSFO prices in Asia Pacific might not come across as a surprise, they have done that for most of the 2020/2021 winter season and have been well above HSFO since mid-May again,” JBC Energy said in a note released late-Monday.
“This week, however, benchmark JKM (Japan/Korea Marker for LNG) front-month quotes have come increasingly close to VLSFO Singapore prices and will be overtaking them any time now, therefore utility companies might be interested in switching fuels,” said the research consultancy.
Citing Vortexa data, JBC pointed to a “considerable” pick up in VLSFO buying interest from regional nations with swing power generation capacities.
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