Asia residue fuel market - Key market indicators this week

Singapore — The Asian marine fuels market was unlikely to see any significant uptick in the ensuing days, said traders. Despite initial signs of a gradual pick up in demand, a less-than-upbeat market sentiment was underpinned by a supply overhang.

Mirroring a lack of optimism, the market structure at the front of the Singapore Marine Fuel 0.5% swaps curve was said to be trading at minus $6.5/mt in mid-morning trades Tuesday, unchanged from it's Asian close Friday, said broking sources.

Singapore was closed Monday for the Hari Raya Puasa holiday.

Marine fuel 0.5%

** Despite expectations of a drop in the inflow of arbitrage cargoes in June, traders expect supply to remain ample given the current high inventories.

** In the week ended May 21, Singapore's commercial onshore residue stocks jumped 4.7% on the week to 26.172 million barrels, or 4.12 million mt, amid sluggish bunker demand, latest data from Enterprise Singapore showed. In addition to stocks in landed terminals, there are 5 million mt or so of low sulfur material stored on floaters in and around Singapore, traders said.

** On the end-user side, market participants expect further downward pressure due to a supply overhang amid subdued demand. Singapore-delivered Marine Fuel 0.5%S bunker premium to Singapore Marine Fuel 0.5% cargo, which touched an 11-week high of $36.08/mt April 30, fell to $14.57/mt Friday, S&P Global Platts data showed.

** In the Middle Eastern bunkering hub of Fujairah, demand for the IMO-compliant marine fuel is expected to remain weak in the near term amid oversupply, traders said. Recent inquiries continue to be for lower-than-usual parcel size of below 1,000 mt due to cautious buying sentiment, traders said.

** Marine fuel 0.5% bunker price in South Korea is expected to normalize this week, as all four refiners resume spot offers for June loadings following a dearth of supply for end-May delivery.

** Relatively lower marine fuel 0.5% bunker prices in Japan due to surplus supply may draw demand from neighbouring ports, said traders. Tokyo-Bay delivered marine fuel 0.5% averaged $244.60/mt last week, compared to $283.65/mt in South Korea and $272.60/mt in Shanghai, Platts data showed.

High sulfur fuel oil

** The Asian HSFO market was expected to be rangebound in the ensuing days, said traders. Singapore 380 CST HSFO market was unlikely to see any significant uptick from current levels on ample supply, while on the end-user side, the erstwhile mainstay Singapore-delivered 380 CST bunker market was expected to remain supported as traders refrain from lowering offers to attract buying interest, said traders.

** Reflecting this sentiment, the Singapore prompt month market structure was said to be trading steady at minus $5.75/mt in mid-morning trades Tuesday, unchanged from it's Asian close Friday, said broking sources.

** Singapore-delivered 380 CST bunker premium to Singapore 380 CST HSFO cargo is expected to remain supported at prevailing levels. It has progressively inched higher to be assessed at $21.83/mt Friday, up from an 11-week low of $12.24/mt on April 6, Platts data showed.