SINGAPORE: Asia’s 0.5% very low-sulphur fuel oil (VLSFO) market complex edged higher on Thursday, after steep losses earlier in the week, on concerns of weak demand and ample supply.
VLSFO cash differentials, front-month time spreads and cracks against Dubai crude all edged higher on Thursday, away from multi-month lows on Tuesday.
Meanwhile, 380-cst cash differentials scrapped a fresh 10-month low of minus $2.32 a tonne as a weakening fundamental supply-demand outlook continued to weigh on sentiment.
Singapore residual fuel oil inventories fell 5% in the week to May 19, moving further away from to a more than four-year high at the start of the month as net import volumes dropped to a 2021 low, official data showed on Thursday.
The lower inventories, however, came despite continued sluggish spot demand for marine fuels at the world’s top bunkering hub, trade sources said.
Onshore fuel oil stocks dropped by 1.42 million barrels, or about 223,000 tonnes, to 24.96 million barrels, or 3.93 million tonnes, Enterprise Singapore data showed. In the week to May 5, Singapore fuel oil stocks hit their highest since March 2017 at 27.23 million barrels, or 4.29 million tonnes.
Compared with last year, Singapore’s residual fuel stocks were 5% lower.
After elevated arbitrage inflows in March and April, fuel oil shipments into the East Asia were assessed at about 5 million tonnes in May, marking a second consecutive month of shrinking arrivals, according to Refinitiv Oil Research.
Net import volumes plunged 63% from the previous week to 321,000 tonnes, well below the 2021 weekly average of 785,000 tonnes. Weekly figures, however, are volatile.
The largest net imports were from Malaysia at 166,000 tonnes, followed by Iraq with 120,000 tonnes, Japan with 39,000 tonnes and Jordan with 35,000 tonnes.
Weekly Singapore imports from the United Arab Emirates were absent for the first time this year.
Singapore’s top fuel oil net exports destinations were Hong Kong at 40,000 tonnes, South Korea at 31,000 tonnes and Bangladesh at 24,000 tonnes. Thailand’s ThaiOil sold a 28,000 tonne VLSFO cargo with a maximum 180-cst viscosity and a maximum 0.5% sulphur content loading from Sriracha over June 13-17 to an unknown buyer at a $7-$8 per tonne discount to Singapore quotes on an FOB basis.
Tahiland’s PTTGC meanwhile sold a 28,000 tonne VLSFO cargo with a maximum 380-cst viscosity and a maximum 0.5% sulphur content loading from Map Ta Put over June 8-10 to an unknown buyer at a $4-$5 per tonne discount to Singapore quotes on an FOB basis.
Trade sources attributed the price difference between the two Thailand cargoes to different specifications, including the lower viscosity of ThaiOil’s cargo.
No 0.5% very low-sulphur fuel oil (VLSFO) or high-sulphur fuel oil (HSFO) cargo trades were reported in the Singapore trading window.
Japanese shipping company Mitsui OSK Lines (MOL) said on Wednesday it will accelerate efforts to build a global supply chain of cleaner marine energy using fuels such as hydrogen and ammonia as the world heads toward carbon neutrality by 2050.
This week, MOL announced its entry into a joint development study on the ammonia fuel supply chain in Singapore with Itochu Corp and four other partners, and a plan to re-enter the ammonia transport business, which it quit in 2016.
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