Bunker demand weakened in March across Indian, Sri Lankan ports

Demand for bunker fuels at Indian and Sri Lankan ports remained weak in March, despite stable supplies, according to traders.

"In March, availability improved, but demand inquiries were very slow," an India-based bunker supplier told Platts. "I heard that charterers were unable to secure good rates, leading to slower fixtures. We're uncertain where the volumes are going, as even Sri Lankan players are also reporting slow demand. Although we have available funds, the slow bunker demand, particularly in March, has made it difficult to effectively utilize or rotate these funds."

Market participants said inconsistent product availability in the past has affected the number of inquiries. Indian Oil Corp. Ltd.'s Koyali refinery, the largest domestic supplier of very low sulfur fuel oil in India, returned online in H1 March after maintenance.

Total bunkering and ship-to-ship calls to Indian ports rose 15% month on month in March to reach 1,228, from 1,068 calls recorded in February, according to S&P Global Commodities at Sea.

Platts, part of S&P Global Commodity Insights, assessed VLSFO delivered to Kochi at $550/mt April 9, down $27/mt week on week, In Singapore, Platts Marine Fuel 0.5% FOB Cargo fell $76.7/mt to close at $449.39/mt over the same period. Marine fuel oil 0.5% delivered to Colombo was assessed at $555/mt, down $45/mt week on week.

"The availability of products is refinery-dependent, and the challenge for us, as market participants, is that we don't import products the way other countries do," said a Mumbai-based trader. "In the coming months, with the onset of the monsoon, demand is expected to slow. While availability will remain relatively high due to the pause in road construction, demand will likely be lower."

A source close to IOCL told Platts: "In March, we faced challenges sourcing products at the Port of Kandla since IOCL's volumes declined due to reduced demand. Inquiries were also limited, with only a few received in the last week of March."

VLSFO demand mixed: traders

Sources said East Coast India-based ports such as Paradip and Chennai continued to face supply shortages for VLSFO despite improvements elsewhere. However, the port of Visakhapatnam had sufficient availability despite tepid demand.

"Port-wise, on the East Coast, Paradip has been without marine fuel 0.5%S for quite some time due to their own consumption outpacing supply," another India-based trader said. "New Mangalore is also tight on availability."

A Visakhapatnam-based trader said demand for VLSFO in that port remained weak in March at 10,000-12,000 mt, while high sulfur fuel oil demand "persisted due to calls from scrubber-fitted vessels." Hindustan Petroleum Corp. Ltd. supplied about 2,000-3,000 mt of HSFO there, he added.

Bunker demand at the port of Kochi, which is frequently viewed as a competitor to Sri Lankan ports, has remained subdued. However, market participants noted increased volumes as supply availability has returned.

"[Bharat Petroleum Corp. Ltd.] is positioning the product now," a source close to BPCL told Platts. "The volatility of rates could have suppressed demand at Kochi. Our competitors too had a limited product, so the overall volumes at the port wouldn't be more than 13,500 mt. The VLSFO exports to Sri Lanka continued in March. We did around two-three cargoes as the margins remain favorable on these trades."

Sri Lanka

Market participants reported a drop in monthly volumes for March at major Sri Lankan ports, including Colombo and Hambantota, attributing the weakness in demand to sluggish regional demand and availability of supplies at competing ports.

"In March, there was decent demand in Colombo and Trincomalee," a source close to Lanka IOC said. "However, volumes declined by 35%40% due to ongoing tariff issues and market volatility, leading to significant uncertainty."

In February, the source said IOC supplied nearly 28,000 mt of bunker fuels in the ports of Trincomalee and Hambantota, dropping down to 20,000 mt in March. Additionally, demand for MGO slightly declined, he added.

"The industry volumes for March would range between 55,000 mt and 60,000 mt," a Colombo-based trader said, "All major shipping liners such as MSC, CMA CGM and Maersk continue to lift significant volumes from Colombo. Last week only we supplied three MSC vessels. However, because Colombo has a combined storage, the players have decided to hold their parcels for the moment to avoid a situation of oversupply in the market due to the weakness in demand."

Total bunkering and ship-to-ship calls to Sri Lankan ports in March slid 7.39% to 213 from 230 calls in February, according to CAS data.

Although March showed a decline in activity, traders and suppliers remain optimistic about a rebound in volumes for April. Some have already reported constraints in barging schedules attributed to consecutive bunker supply deliveries.

"In April first week, we delivered good quantities for VLSFO," a Sri Lanka-based trader said. "We're fully booked, and our barge schedules remain tight till April 16. We've added a bigger barge to the fleet, which is expected to be operational this month onwards."