Singapore's Sep term ex-wharf HSFO bunker premiums mostly fall on month

Term contractual supply of Singapore ex-wharf 380 CST high sulfur fuel oil bunker cargoes for September were inked at premiums of around $6-$16/mt to the benchmark FOB Singapore 380 CST HSFO cargo values, wider than the $7-$15/mt premiums done for August-loading cargoes, traders said Aug. 31.

Although some September term ex-wharf 380 CST HSFO barrels were concluded at premiums around low to mid-teens, buyers had largely held back from fixing requirements at stronger premiums, according to local traders.

Substantial lots of term ex-wharf 380 CST HSFO for September-loading dates were traded around $6-$8/mt premiums, whereas higher levels to no more than around $16/mt premiums were traded for smaller parcels and signed very early in August, traders also said.

Despite decent HSFO bunker demand at the world's largest bunker hub of Singapore, slimmer margins owing to ample stockpiles expected in the near term led to ex-wharf buyers adopting a more cautious approach toward fixing ex-wharf requirements at higher prices, bunker suppliers said Aug. 31.

"HSFO ex-wharf levels [for September's supply] were mostly hovering around $10/mt premiums lately; anything above this hasn't been seen since H2 August. So, [the current] delivered prices are still at a premium to ex-wharf levels, which suggests a normal market," a Singapore-based fuel oil trader said Aug. 31.

The Platts-assessed Singapore-delivered 380 CST HSFO bunker premium over FOB Singapore 380 CST HSFO cargo values slipped to an over 14-month low of $12.11/mt Aug. 30, 18 cents/mt lower on the day, according to data from S&P Global Commodity Insights

This bunker premium was last assessed lower at $11.13/mt June 13, 2022.

Some cargo suppliers had previously raised offers for August's supply of term ex-wharf 380 CST HSFO on the back of stronger upstream valuations, crunching downstream margins as a result, traders said.

Spreads between the Singapore-delivered 380 CST HSFO versus same ex-wharf grade, known as the barge spread, narrowed to average $3.90/mt Aug. 1-30, almost half of $6.24/mt across July, Platts data from S&P Global showed.

The HSFO market, which witnessed some downward pressure in the week started Aug. 28, could likely weaken a bit further in coming days as Middle East supplies were seen increasing, trade sources said.

Two shipments totaling 2.315 million barrels, or 364,645 mt, of HSFO hailing from the UAE are scheduled to land around the Singapore Straits during Sept. 2-6, according to data by Kpler.

In addition, two cargoes comprising of 1.290 million barrels, or 203,103 mt, of replenishment HSFO originating from the Russian ports of Ust Luga and Vysotsk are bound to discharge along the Singapore Straits between Sep. 2 and Sep. 4, Kpler data also showed.

Cargo inflows to buoy stocks

According to trade sources, more supplies are flowing in from the Middle East as the peak power generation demand season is ebbing and more barrels should head toward Singapore.

"Although still a sizeable volume of Russian cargoes is going to the Middle East and getting blended in and around the Fujairah area, all the cargoes coming from Fujairah are not Russian material ... there are some genuine [non-sanctioned] barrels, and that's why people have the confidence to bid and offer on the [Platts] window and trade," a Singapore-based trader said.

"The HSFO market has come off quite a bit. But I don't think it'll continue to sink much further because bunker demand for the last two months has been pretty solid and should stay healthy in the near term. So, the cash differentials and the cracks should find a bottom soon, and stay supported and rangebound and not slip much further downward," he added.

Platts assessed the Singapore 380 CST HSFO cash differential over MOPS 380 CST HSFO assessments at a premium of $9.75/mt Aug. 30. The benchmark HSFO cash premium, which has slumped about 60% in the last two weeks, was at its lowest level since July 26, when it was assessed at $9.08/mt, S&P Global data showed.

Meanwhile, the Singapore 180 CST HSFO cash differential to MOPS 180 CST HSFO assessments was assessed lower at a premium of $12.75/mt Aug. 30, the lowest level so far in August, weighed down by aggressive offers from P66 during the Platts Market on Close assessment process.

Traders added that September typically tends to witness the start of the year-end bunker demand season and that would likely cap any major downside in coming months.