Severe weather expectations hit North Asian bunker demand

Strong winds around Japan and high waves in South Korean waters are likely to hurt bunker demand, as buyers defer bunker inquiries and suppliers postpone existing nominations to the following week, traders said Nov. 19.

Bunkering ports around Eastern Japan and Kyushu region are experiencing gale force winds that are forecast to stretch into the weekend, according to a warning issued by the Japan Meteorological Agency Nov. 19.

"Some of the bunker delivery nominations for November have already been cancelled altogether, due to the bad weather conditions," a bunker supplier based in Tokyo Bay said. "Meanwhile, shipowners are holding back on fresh nominations at least until the strong wind subsides."

A Japan-based trader said that market players have been "very busy" rescheduling bunker deliveries, which also have been potentially impacted by worsening barge congestions.

"Some suppliers have also ceased accepting fresh offers due to tight bunker fuel availability anyway," the bunker supplier said. "This [severe weather condition] especially implicates the existing nominations, as delays are to be expected over the ensuing days."

The premium of Japan-delivered marine fuel 0.5%S against the benchmark Singapore Marine Fuel 0.5%S cargo assessments surged to a near 20-month high of $50.82/mt Nov. 17, due to depleting inventories. The premium was last higher $62.49/mt March 27, 2020, and stood at $49.92/mt Nov. 18, S&P Global Platts data showed.

High waves of up to 4 meters are expected on the western and southern ports of South Korea over the weekend and early part of the week starting Nov. 22, according to a Nov. 19 maritime forecast by the Korea Meteorological Administration.

Bunkering operations are ideally performed at wave heights of 2-2 1/2 meters, while warnings are typically issued due to safety concerns if waves exceed 3 meters, sources said.

Shipowners are holding back on bunker inquiries, as bunkering activity is expected to be suspended around Nov. 21, traders said.