India's bunker demand falls, Sri Lankan markets stable

Demand for bunker fuels at Indian ports remained sluggish in the month of September despite stable availability of supplies, market participants said.

Despite weaker demand at Indian ports, LSFO prices rose with crude oil in the beginning of October. As the prompt-month Platts Dubai crude price was at $76.57/b on Oct 4, up from $69.69/b Oct. 1, LSFO offers were also driven higher.

Platts, part of S&P Global Commodity Insights, assessed 0.5% marine fuel oil delivered to Mumbai at $620/mt CFR Oct. 4, up $5/mt week on week, while in Kochi it rose $29/mt to close at $610/mt. In Sri Lanka, prices at Colombo were assessed at $650/mt, up $5/mt week on week.

“In India, product availability at western ports remains strong, supported by competitive pricing. Across the eastern coast, ports like Vizag and Kakinada have also seen improved availability. High sulfur fuel oil is primarily available in Mumbai and Cochin, with some availability in Vizag as well.”, a Mumbai-based trader said.

West Coast India, Sri Lanka

Ports across the west coast of India witnessed tepid demand in September with some suppliers facing availability issues.

“Because of the monsoon and the crude mix, we were not having VLSFO avails. When we get crude oil with high sulfur content, it usually reduces VLSFO production. That was the issue with us,” a Mumbai-based supplier said.

“However, HSFO enquiries were good last month. The volume diversion due to product shortages elsewhere supported our HSFO supplies. But VLSFO enquiries were down and we weren’t having much avails either. Starting this month, we expect to see an increase in inquiries as we position ourselves with the product,” the supplier added.

Bunker demand at the Port of Kochi, often considered a competitor to Sri Lankan ports, remained mixed, with some players experiencing a boost while others faced a subdued market. According to S&P Global's Commodities at Sea data, total STS and bunkering operations at the port fell 12.5% month on month to 84 in September, down from 96 in August.

“Kochi has seen volumes of 25,000 mt for September. IOCL has done 80% of these volumes as other local suppliers were short on avails. But are expecting a good flow of product in October”, a local supplier said.

Market participants reported that Bharat Petroleum Corporation Limited (BPCL) has exported a mixed cargo of VLSFO and HSFO to the Sri Lankan market.

“We exported two parcels of 8000 metric tons each to Sri Lanka in second and fourth week of September. We are hearing about export of a few parcels in October as well”, a source close to the developments said. .

Sri Lankan bunker demand weakened slightly month-on-month in September, market participants said. According to CAS data, total STS and bunkering operations at Sri Lankan ports were at 203 in September, down from 202 in August.

“In Colombo, total volumes reached 60,000 metric tons, comprised of 50,000 metric tons of VLSFO and around 5,500 metric tons of HSFO. We observed a drop in LSFO demand in September due to competitive pricing in India. There was a 30-40% drop in inquiries in September,” a Sri Lanka-based trader said.

“Demand has been moderate so far. October appears to be lagging, with the market showing backwardation; however, we are starting to see signs of recovery. Product availability is good”, the trader added.

“Our September volumes at Sri Lanka reached 65,000 metric tons which reflects a slight decrease from August,” said another Colombo-based trader.

“With the monsoon season coming to an end, we anticipate improved demand as the market is oversupplied for October”, the trader added.

East Coast India

In India's east coast port of Visakhapatnam there was a notable increase in demand for HSFO, but in the Port of Haldia there was a decline in volumes due to an ongoing refinery maintenance that's tightened supply. .

“Last month, volumes at Haldia were down 33% due to the ongoing challenges with the refinery that has resulted in product inconsistency,” a trader based in Visakhapatnam said.

“The refinery is expected to revive around third week of October,” said a source close to Indian Oil Corporation Limited Haldia Refinery.

In Chennai, market conditions remained stable despite a mid-month product shortage. New Mangalore experienced fewer vessel arrivals and increased average bunker sizes, while HSFO inquiries rose, but supply is restricted to pipeline deliveries due to a lack of barge or truck availability.