Singapore June term ex-wharf HSFO bunker premiums narrow on buoyed stockpiles

Term contractual supply of Singapore ex-wharf 380 CST high sulfur fuel oil bunker cargoes for June was mostly concluded at premiums of around $8-$10/mt over the benchmark FOB Singapore 380 CST HSFO cargo values, narrowing from $7-$12/mt premiums done for May-loading parcels, traders said May 31.

Recent offers for June-loading term ex-wharf HSFO cargoes have ranged around $9-$10/mt premiums, down from premiums around the low-teens previously inked for May's supply, according to traders.

Competitive selling activity in the end-user market and elevated stockpiles are key factors contributing to the pressure on premiums despite healthy demand, as suppliers are keen to move their cargoes, bunker suppliers said.

"There's stable HSFO [bunker] demand, but downstream premiums are sometimes low because some players are being very competitive," a Singapore-based bunker supplier said May 31.

The Platts-assessed Singapore delivered 380 CST HSFO bunker premiums over the FOB Singapore 380 CST HSFO cargo assessments slipped to average $16.71/mt May 2-30 from $19.22/mt for April, according to data by S&P Global Commodity Insights.

"Cargo availability isn't an issue. At least two of [Singapore's] HSFO suppliers are usually being very aggressive with their pricing. We even had to fix some [delivered] deals below ex-wharf levels," a Singapore-based trader said.

As a result, margins for HSFO bunker deliveries have so far underperformed expectations, with ex-wharf buyers refraining from meeting their monthly procurements at higher premiums, suppliers also said.

The spread between Singapore-delivered 380 CST HSFO bunker and the similar ex-wharf grade, also known as the barge spread, narrowed to $6.48/mt May 2-30 from $7.47/mt across April, S&P Global data showed.

Steady inflows to the port of Singapore could weigh on market and limit any significant upside potential for ex-wharf and delivered bunker premiums, local traders said.

Supplies headed for Singapore are expected to lift stockpiles in the absence of any notable restocking activity by the Middle Eastern utility sector despite the ongoing summer season, and in addition to Pakistani exports owing to lackluster power generation demand, traders also said.

The cash differential for Singapore 380 CST HSFO bunker to the Mean of Platts Singapore 380 CST HSFO was assessed 93 cents/mt down on day at an over three-month low of $3.42/mt May 30, which was the lowest since Feb. 28 at $2.17/mt, according to data by S&P Global.

Three shipments totaling 2.61 million barrels, or 411,415 mt, of HSFO originating from Fujairah are scheduled for discharge along the Singapore Straits between May 31 and June 3, according to latest shipping data by Kpler.

Cargo inflows from other origins include a 291,929-barrel, or 45,973 mt, of HSFO hailing from Pakistan and a 562,183-barrel, or 88,533 mt, of HSFO sourced from the Russian port of Vysotsk, to land around Singapore port on June 5 and June 24, respectively, Kpler shipping data also showed.