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Singapore bunkers slip in regional competitiveness


Image Credits: Argus Media / Manifold Times

Repost: The cost of lifting bunkers in Singapore is rising relative to neighbouring ports in Asia on tighter very-low sulphur fuel oil (VLSFO) supplies, rising feedstock costs, and intensifying competition in the region.

Arrivals of VLSFO cargoes to Singapore for February and especially March are quite low and VLSFO components for blending are expensive, one local trader said.

This is resulting in high cargo and ex-wharf premiums, which in turn is pushing the delivered spot price of bunkers in the city-state higher relative to China, Japan and South Korea.

VLSFO is locally produced in east China’s Zhoushan and South Korea, giving them an edge over Singapore, as the country needs to import the product from abroad, incurring additional shipping costs. “Zhoushan and Korea are hungry to get volume,” another local trader said.

Vessels struggle to lift bunkers at times in Zhoushan because of regulations and inclement weather, which further incentivises companies there to sell at competitive prices as they need to release the product into the market.

Contract prices in Japan and Korea for delivered bunkers are based on monthly averages. Their spot prices have grown more attractive in comparison as crude oil prices have risen strongly on the back of physical tightness and geopolitical upheaval with the potential of military escalation in Ukraine.

“This is a very unusual situation and a big change from a year ago,” said a bunker broker, referring to bunkers being cheaper now in China and Japan than in Singapore.

The discount of Zhoushan VLSFO bunkers relative to Singapore has averaged $8.51/t so far in February, up from $3.50/t in January, according to Argus data.

Bunkers in Tokyo, meanwhile, sold at a discount of $8.92/t yesterday versus Singapore. Bunkers in Tokyo have averaged a premium of just $3.22/t over Singapore so far this year, compared to an average of $16.41/t in 2021.

VLSFO bunkers in South Korea saw their premium narrow to an average of $13.9/t versus Singapore so far this year, down from an average of $23.15/t last year.

Source:
Argus Media

Marine Online Media Team
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