Bunker demand robust in India, Sri Lanka sees a drop due to monsoon

Demand for bunker fuels at West Coast India-based ports remained strong in May, supported by competitive pricing and robust inquiries. However, Sri Lanka saw a drop in volumes as the southwest monsoon disrupted demand starting in the second week of May.

Demand picks up at West Coast India

According to data from S&P Global Commodities at Sea, total bunkering and ship-to-ship calls in India increased by 10.69% month over month in May to reach 1,242, the highest since the start of the year.

Market participants noted that prices remained competitive throughout May, which, along with uninterrupted supplies, contributed to a surge in demand at West Coast-based ports.

"Prices are competitive as both refineries have lowered their premiums over the Mean of Platts Singapore," a Gujarat-based trader told Platts, part of S&P Global Commodity Insights. "On the West Coast of Gujarat, we had not seen any effect of the monsoon in May. Overall, there was a significant rise in inquiries, and we were able to supply adequate volumes with support from both Indian Oil Corp. and Bharat Petroleum Corp. refineries."

"Last month, we saw good avails across both coasts. There were no major issues," a Mumbai-based trader said. "On the East Coast, availability was tight at times but mostly manageable. However, due to the early onset of monsoon from the third week of May, we faced a few weather-related operational issues at Kochi and Colombo."

Bunker demand at the port of Kochi, often regarded as a competitor to Sri Lankan ports, reached its highest volumes since the start of the year. According to CAS data, total bunkering and ship-to-ship calls in May rose by 35%, increasing to 120 from 89 in April.

"We saw a good demand in May. The industry volume, including high sulfur fuel oil at Kochi, reached over 32,000 mt last month. We have had continuous product availability and expect to do well in June. However, we're watching for monsoon-related disruptions and the uncertainties looming in the market due to the conflict between Israel and Iran," said a Kochi-based supplier.

Platts, part of S&P Global Commodity Insights, assessed VLSFO delivered to Mumbai at $589/mt on June 18, up $6/mt since the start of the week. In Singapore, Platts Marine Fuel 0.5% FOB Cargo rose $11.77/mt to close at $548.1/mt over the same period. Marine fuel oil 0.5% delivered to Colombo was assessed at $615/mt, up $8/mt from the beginning of the week.

Sluggish demand at East Coast-based ports

Market participants noted that although product availability began in the first week of May, bunker demand remained low due to insufficient inquiries in the region.

"There was insufficient bunker supply in May," a Visakhapatnam-based trader told Platts. "Although the product arrived in the first week of May, there were not enough inquiries in the region, which resulted in low volumes. Until December of last year, the bunker demand was good. However, many bunker buyers are still unaware that the port serves as a bunker hub. We continue to encourage our clients to source bunkers from Mangalore when there are supply shortages in Kochi".

Another trader said that "markets remained stable" at Tuticorin, with an overall supply volume ranging between 4,000 mt and 5,000 mt.

A Mumbai-based trader said that very low-sulfur fuel oil "remained unavailable" due to "ongoing maintenance" at the port of Paradip.

Monsoon, competitive prices elsewhere dampen Sri Lanka demand

Market participants in Sri Lanka reported that disruptions caused by the monsoon in the second half of May, combined with competitive VLSFO prices at Indian ports, resulted in a decline in bunker demand in Sri Lanka.

Total bunker fuel volumes in Sri Lanka reached 60,000 mt in May, according to the Platts Bunkerworld survey.

"In May, demand at Hambantota and Colombo dropped compared to April, primarily due to the monsoon," a Colombo-based trader told Platts. "The price differential for Colombo-India increased from $15-$20/mt in April to $25-$30/mt in May. Overall market demand for all three products fell 13% in May, down from over 70,000 mt in April. The impact of the monsoon became evident from the second week of May, leading to oversupplied markets as back-to-back cargoes flowed through Colombo during late May and early June."

Total bunkering and ship-to-ship calls to Sri Lankan ports in May slid 18.64% to 144 from 177 calls in April, according to CAS data.

However, traders reported that there is a robust demand for HSFO at Colombo, as most ships in need of bunkers are arriving from the southern region.

"There have been significant inquiries for HSFO, ranging from 2000-2300 mt. A challenge in HSFO supplies arose from restrictions imposed by the Ceylon Petroleum Corporation on loading windows for barges. However, a new pipeline being constructed next month will alleviate this issue, allowing for more flexible loading of HSFO to meet demand.", a Sri Lanka-based trader said.

A source close to Sri Lanka IOC PLC reported "good demand" at Trincomalee and Colombo, supplying over 8,000 mt of VLSFO at both ports.