Japan's high sulfur bunker market to see more upside on demand shift, tight supply: traders

Singapore — Japan's high sulfur 380 CST bunker market was likely to see further upside in the near term as demand receives a boost from scrubber-fitted vessels looking for bargains and diminishing availability, traders said Wednesday.

Vessels that have recently completed scrubber installations at Chinese shipyards following the resumption in economic activity are looking to Japan for competitively-priced high sulfur bunker fuel, market sources said.

"Last week four vessels completed scrubber installations at China's shipyards and we are negotiating with them to come to Japan for high sulfur bunker supply," a trader in Tokyo Bay said.

Japan-delivered 380 CST bunker's premium to the benchmark Mean of Platts Singapore 380 CST high sulfur fuel oil assessments rose $16.34/mt or 108% week on week to a 10-week high of $34/mt Tuesday due to an uptick in demand amid thin availability, S&P Global Platts data showed.

"Its a little tight on HSFO as demand rose recently; inventory levels are low," the trader said.

High sulfur 380 bunker fuel prices at Tokyo Bay has been the most competitive among major North Asian bunkering ports recently. Tokyo Bay-delivered 380 CST bunker has averaged $178.71/mt month to date, compared with $222.93/mt for the same grade delivered at Shanghai and $216.80/mt in South Korea, Platts data showed.

Japan' bunker market was likely to see valuations inch higher in the near term as supply continues to tighten as refineries reduce run rates and enter the spring maintenance season, market participants said.

"LSFO supply is much more than HSFO and there's no [incremental] availabilities of HSFO seen in April," another trader said.