Asia residue fuel market - Key market indicators this week

Singapore — Asian refiners are keenly following discussions for official selling prices from the Middle East for October crude loadings in the trading week starting Aug. 11 to assess the competitiveness of using feedstock crude against straight-run fuel oil.

Any change in the feedstock slate will have an impact on low sulfur fuel oil production rates, according to sources at refineries.

MARINE FUEL 0.5% SULFUR

** Discussions for the Singapore Marine Fuel 0.5% September/October timespread opened Aug. 11 with offers at minus 50 cents/mt against no bids, largely stable from Aug. 7.

** Inquiries for low sulfur bunker fuel increased slightly in the week ending Aug. 7, with demand supported by buyers that had not procured term volumes for the third quarter as they anticipated further market volatility and were now in the market to replenish inventories, market sources said.

** The Singapore-delivered Marine Fuel 0.5%S bunker premium to Singapore Marine Fuel 0.5% cargo rose to $19.37/mt Aug. 7 from $10.95/mt July 30.

** Demand for marine fuels has been diverted from Hong Kong to the rest of North Asia due to a new 14-day quarantine requirement.

** In South Korea, lower output of low sulfur marine fuel has provided a floor for prices. The Busan/Ulsan delivered marine fuel 0.5%S differential to the FOB Singapore 10 ppm gasoil cargo averaged minus $5.30/mt over Aug. 3-7, down from minus $9.73/mt over July 27-30, S&P Global Platts data showed.

HIGH SULFUR FUEL OIL

** In the downstream bunker market, supply remains tight as some buyers are still supplementing their term volumes with spot as more vessels complete scrubber installations, and traders expect supply to remain tight in the near term.

** The Singapore-delivered 380 CST bunker premium to Singapore 380 CST HSFO cargo assessments fell to $16.88/mt Aug. 7 from $20.09/mt July 30.

** The Hong Kong high sulfur bunker fuel market is also experiencing supply tightness, which traders expect to continue as majors hold back on bringing in cargo due to a new 14-day quarantine rule, even as demand remains robust from ships that have completed scrubber installations.

** Hong Kong imposed a 14-day quarantine rule for cargo ships calling at its port for purposes other than loading or discharging cargoes from July 29 as part of measures to curb a resurgent spread of coronavirus.