Bunker demand mixed at Indian ports in April; strong demand in Sri Lanka

Demand for bunker fuels at Indian ports was mixed in April despite stable supplies. In Sri Lanka, however, participants reported steady volumes that surpassed 70,000 mt in the same month.

West Coast India sees demand uptick at select ports

Demand for bunker fuels increased at the port of Mumbai, where market participants reported a rise in volumes for high sulfur fuel oil and very low sulfur fuel oil.

"April was strong, with good product availability in Mumbai and Kochi," a source close to Hindustan Petroleum told Platts. "We received 3-4 stems from MSC for HSFO but had to decline some due to high demand. Since the Hi-5 spread remained low, ranging between $20-$30, the demand could have risen from MSC contracts expiring in the Middle East, which opened volumes in the market. We sold around 30,000 mt of bunker fuels, including 12,000 mt of HSFO, with Bombay lifting the highest share."

A Visakhapatnam-based trader said demand for HSFO continues to be strong at major ports like Mumbai, Visakhapatnam and Kochi in April. There are no concerns regarding its availability, as "refinery production is primarily aimed at meeting the needs of industrial clients (bitumen) rather than for bunkering.This approach allows refineries to serve both industrial and bunker markets effectively."

However, market participants noted that other ports like Gujarat and Kerala have not experienced a surge in demand, as inquiries have shifted elsewhere due to the ongoing lack of product availability over the last few months.

A Gujarat-based trader noted that April was a slow month and there was a significant reduction in demand as many tankers have diverted due to the ongoing unavailability of product at Indian ports.

"We had a good product availability in Kochi, but dull demand overall," said a source close to Bharat Petroleum Corp. "Kochi recorded volumes of about 15,000 mt, primarily driven by inquiries from domestic vessels, with a limited interest from foreign ones. Traders held back due to last month's price fluctuations."

Platts, part of S&P Global Commodity Insights, assessed VLSFO delivered to Kochi at $540/mt on May 9, up $2/mt week on week, In Singapore, Platts Marine Fuel 0.5% FOB Cargo rose $15.54/mt to close at $487.64/mt over the same period. Marine fuel oil 0.5% delivered to Colombo was assessed at $558/mt, down $7/mt week on week.

Sluggish demand at East Coast Indian ports

Traders on the east coast of India reported shortages of VLSFO throughout April at the ports of Visakhapatnam, Chennai and New Mangalore, leading to a significant drop in demand. Ongoing terminal maintenance at Kakinada, along with low buyer interest at Paradip, also negatively affected monthly volumes.

"This year, we're not seeing much volumes compared to Sri Lankan ports," said a second Visakhapatnam-based trader. "Kakinada terminal has remained shut for regular maintenance for the past month. As a result, products are being lifted from Visakhapatnam by tank trucks and supplied to Kakinada port, costing $15 more than the usual price. In the second half of April, there were no products available at Chennai, New Mangalore, Tuticorin, and Haldia."

A trader based on the East Coast of India indicated that they receive inquiries for an average of 10,000 mt at any given port, but they can only fulfill requests for 3000-5000 mt, resulting in a shortage of about 50% of inquiry volumes.

"Last month, I fixed most of the non-Indian ports due to availability issues within India. The only Indian port we fixed was for coastal vessels requiring duty-paid products," another trader added.

Market participants noted that while supplies are now available at all ports, Haldia stands out as an exception due to production-related delays.

"Production in Haldia has paused due to the high sour crude received," said a source close to the situation.

"News came in that the Haldia refinery's product is delayed. Initially, we expected it [to arrive] by the last week of April, but it has now been pushed to the first week of May," a Mumbai-based trader said. "There has been some availability in Chennai, where we managed to fix a very small amount of VLSFO."

Sri Lankan ports experience steady demand

In April, major Sri Lankan ports saw a slight increase in volumes due to the narrowing price spread with India, ongoing cargo imports, and a steady demand from container vessels.

Total bunker fuel volumes in Sri Lanka reached 74,250 mt in April, according to the Platts Bunkerworld survey.

"During the first two weeks of April, the price differential between India and Colombo was low, leading to increased inquiries in the market," a Colombo-based trader told Platts. "However, by the later weeks, the price differential climbed to $25/mt. Overall inquiry volume for April remained steady at 85,000-90,000 mt, with a higher conversion rate for VLSFO at 60-65%, up from 50% in March. Total industry volumes, including Colombo, Trincomalee, and Hambantota ports, ranged between 70,000-75,000 mt, while the average price spread between India and Colombo remained rangebound, fluctuating between $15-$20/mt."

A source close to Lanka IOC PLC reported strong demand last month and expects good inquiries in May as well. The company is at an advantage when India lacks any product, the source added.

According to traders, there is a strong demand for HSFO at Colombo, as most of the vessels requiring bunkers arrive from the southern region. However, due to limited product and barge availability, HSFO deliveries took a hit in April.

"There are two major suppliers for HSFO in Sri Lanka. Last month, Sinopec did not offer any product, and Ceylon Petroleum Corp. prices were not competitive. Thus, we were unable to offer it at our ports," a Sri Lanka-based trader said. "Secondly, we had a limited barge availability for high-sulfur deliveries as some barges had gone for dry docking and repairs. However, for this month, both suppliers have offered the product at competitive rates, and barges are back in operation now."