Asia residual fuels: Key market indicators for Aug 2-6

The cash differential for the FOB Singapore 180 CST high sulfur fuel oil assessment was expected to rebound in August after dipping in late July as pricing for late August and early September-delivery cargoes from power generation utilities comes into effect, traders said.

In contrast, bunker suppliers of marine fuel 0.5% in Singapore were cautious Aug. 2 after a recent firming in delivered premiums. "For the first week of August at least, there's been some good demand and fixings from ships," one supplier said.

The October ICE Brent crude oil futures contract was trading at $74.34/b at 0315 GMT Aug. 2, down from $75.09/b at the 0830 GMT Asia close July 30, Intercontinental Exchange data showed.

Singapore

** Discussions for the Singapore Marine Fuel 0.5%S balance August-September spread were slightly weaker Aug. 2 than July 30, with bids at 50 cents/mt against offers at $2.25/mt, according to Intercontinental Exchange data.

** Despite a dip in low sulfur fuel oil arbitrage inflows into Singapore in August, bunker suppliers said they were having no problem sourcing cargoes in H1 August.

** "I recently saw some offers for the first week of August, and I myself have received some [ex-wharf] offers for the second week of August, so despite less [LSFO] cargo coming in, I don't think there's any real tightness, at least for for H1 [August]," a source at one of the largest Singapore delivered suppliers said.

** Steady demand for the International Maritime Organization-compliant grade has tightened barge availability for prompt delivery in early August, shoring up premiums of Singapore-delivered marine fuel 0.5%S to $6-$8/mt, bunker suppliers said.

** The premium for Singapore-delivered marine fuel 0.5%S averaged $7.86/mt over Singapore marine fuel 0.5%S cargo assessments in July, up from $5.30/mt in June, Platts data showed.

Fujairah

** Dissipating weakness in demand for Fujairah-delivered marine fuel 0.5%S in the second quarter has given way to bullish sentiment for Q3, as the market has seen a consistent flow of inquiries for August delivery dates as an uptick in bunker demand continues, traders said.

** Robust demand for Fujairah-delivered marine fuel 0.5%S for prompt delivery in early August as stabilized premiums of the delivered grade and put further pressure on inventories, market sources said.

** The premium for Fujairah-delivered marine fuel 0.5%S averaged $1.65/mt over Singapore marine fuel 0.5%S cargo assessments in July, unchanged from June, Platts data showed.

** Stocks of heavy distillates at the Port of Fujairah, which include fuel for power generation and marine bunkers, fell 4.7% on the week to a three-week low of 11.21 million barrels July 26, latest Fujairah Oil Industry Zone data showed.

North Asia

** South Korea's marine fuel 0.5%S prices are expected to remain weak in August due to ample supply, according to suppliers there.

** The price in South Korea has been lower than in Singapore and Zhoushan since July 28 as a result of fierce competition among refiners.

** South Korea's marine fuel 0.5%S price was assessed $546/mt July 30, $4/mt lower than in Singapore and $3/mt lower than in Zhoushan, according to Platts data.

** Market sources expect the country will see a similar volume of supply in August from local refineries to July.

** Tight barge schedules at Shanghai and Zhoushan are expected to ease in the first week of August, market sources said.

** Bunkering operations in Zhoushan were suspended over July 22-27 due to Typhoon In-Fa, which tightened the barge schedules at the port, according to sources. Operations in Shanghai were suspended over July 25-28, the sources said.

** Japan's bunker market has normalized after Typhoon Nepartak hit the country on July 27. The supply and demand fundamentals will be stable in August, market sources said.

** 380 CST bunker supply remained ample in South Korea, as well as marine fuel 0.5%S, market sources said.