Asia residual fuel: Key market indicators this week

Singapore — Asian low sulfur fuel oil fundamentals are expected to continue being stable in the week started April 11, with the still relatively profitable spread incentivizing a few refiners to maintain higher output for selling extra cargoes in the spot market.

Middle Eastern high sulfur fuel oil demand for May from the power generation sector has revived a flagging crack spread, even as bunker demand in Southeast Asia, especially in Thailand, continues to languish, according to local sources.

Marine fuel 0.5% sulfur

** Discussions for the Singapore Marine Fuel 0.5%S April/May backwardation April 12 were rangebound, with bids seen at $1/mt against offers at $3/mt, Intercontinental Exchange data showed.

** Refiners in India and Taiwan continue to maintain high output of low sulfur fuel oil targeting sales in the spot market in April and May, citing the more competitive Asian LSFO crack spread compared with the weaker gasoil crack spread.

** In the north Asian bunker market, ample supply is expected to weigh on North Asian 0.5% sulfur bunker market in most of major bunkering ports in the region as demand has not fully come back after a surge in crude oil prices raised bunker prices in March, market sources said.

** Selling pressure in Zhoushan was especially intense in the week ended April 10 due to flagging demand, market sources said, with the momentum expected to continue in the week of April 11.

** Zhoushan's marine fuel 0.5%S delivered bunker premium to Singapore marine fuel 0.5%S cargo dropped to $11.12/mt on April 9, the lowest since Feb. 25 when it was at $7.97/mt, S&P Global Platts data showed.

** Chinese refiners are ramping up their LSFO production amid relatively strong crack spreads for the product, market sources said, resulting in ample supply.

** Reflecting initial signs that the market may look up going into second-half April-loading product, offers in recent days for Singapore ex-wharf marine fuel 0.5%S bunker were being made at $4/mt to Singapore marine fuel 0.5%S cargo, up from around $3.50/mt for first-half April loading product.

** The Singapore ex-wharf marine fuel 0.5%S bunker premium over Singapore marine fuel 0.5%S cargo averaged $3.24/mt in the week ended April 11 compared with the previous week's average of $2.56/mt, Platts data showed.

High sulfur fuel oil

** Morning discussions for the Singapore 380 CST high sulfur fuel oil May/June spread opened April 12 at $1.25/mt, stable from the April 9 assessment, with the bid-offer spread ranging $1/mt against $1.50/mt, according to brokers' indications and ICE data.

** Weaker bunker demand in Thailand has led to more sales of fuel oil in the spot market, according to refinery sources there, with April exports expected to continue the rare increase in exported volumes seen in March.

** Bullish demand from Kuwait for May-delivery HSFO cargo is expected to contribute to a gradual uptick in production margins amid a drawdown in regional inventory to meet power generation demand, according to traders based in Fujairah.

** The Singapore-delivered 380 CST high sulfur bunker market is likely to be bogged down in the near term on ample availability despite steady demand, traders said.

** Even as the Singapore-delivered 380 CST high sulfur bunker market has been waiting to take cues on pricing direction from upstream, the premium for Singapore 380 CST HSFO cargo over the Mean of Platts Singapore 380 CST HSFO assessments has been rangebound, trading in recent days close to the six-week low of 11 cents/mt it was assessed Feb. 25.