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FUJAIRAH DATA: August bunker sales rise 2.5% on month, miss estimates

Highlights

Traders surveyed by Platts expected 5%-10% sales increase

Weak 0.5% sulfur marine fuel premiums spur competition

August high sulfur fuel oil bunker sales up 8.08% from July

Bunker sales in August at the UAE's Port of Fujairah, the world's third largest bunkering hub, rose 2.5% on the month to over 700,000 cu m for the first time in 2021, according to Sept. 15 data from the Fujairah Oil Industry Zone provided exclusively to S&P Global Platts. But the sales still missed estimates, partly because a ship attack off the port in August temporarily disrupted traffic, traders said.

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The total bunker sales were at 707,563 cu m in August, up from 690,339 cu m in July, the data showed. Traders surveyed by Platts had expected the sales to increase between 5% to 10%. A hijacking incident off the coast of Fujairah near the Strait of Hormuz early August upset sales for about two days, industry sources said.

Sales of low sulfur fuel oil were up 1.27% on the month at 542,931 cu m in August, while sales of 380 CST high sulfur fuel oil jumped 8.08% to 129,410 cu m over the same period.

Traders said they observed a "steady flow" of inquiries through August on the back of busier freight traffic from the tanker segment. "Dry bulk carriers supported the bulk of bunker demand at Fujairah, apart from more liftings by tankers," a bunker supplier said.

Stronger bunker demand lifted premiums, although the gains pared in September, traders said.

"Strong demand had shored up premiums of delivered marine fuel 0.5% for a short while, though the support had languished around late August and continues into September," a Fujairah-based trader said.

The premium of Fujairah-delivered marine fuel 0.5%S averaged $2.50/mt over FOB Singapore Marine Fuel 0.5%S cargo assessments in August, up 85 cents/mt from July, while reaching its highest since May 19 at $4.21/mt on Aug. 16, Platts data showed.

The premium averaged relatively lower on the month in September and dropped to $1.72/mt as of Sept. 14, according to the data.

Vessel owners favoring Fujairah

Weaker Fujairah-delivered 380 CST HSFO premiums had pulled some demand away from Asia's bunkering hub Singapore, another bunker supplier said.

Singapore-delivered 380 CST HSFO flipped to a premium of $6.75/mt Aug. 24 against the delivered grade in Fujairah for the first time since March 19. The differential between the two grades averaged minus $9.36/mt in August, and surged to an average of $6.75/mt this month through Sept. 14.

HSFO inventories at both bunkering hubs were tight, but competitive offers for Fujairah-delivered 380 CST HSFO were being made as traders were eager to move oil, sources said.

"Shipowners would maximize HSFO refueling at Fujairah due to the lack of prompt slots for HSFO bunker delivery in Singapore. September's HSFO sales in Fujairah could reflect the strength seen in August," a trader said. Another bunker source disagreed that HSFO demand has much upside at Fujairah, noting that growth in scrubbers installations is quite slow.

Overall bunker sales in September are not expected to surpass August, as demand over the past week has ranged from below average to average, traders said.

"As far as HSFO is concerned, margins are still there but the low sulfur market [in Fujairah] has been bleeding in the past three to four months," a source at a bunker trading firm said.

Fujairah has been predominantly a tanker market, and low steaming by tankers due to poor rates, with many lying idle in hope of better charter rates, has pressured bunker demand in the region, another source at a bunker firm said.

The COVID-19 pandemic has extended the recovery timeline for tanker owners, who held on to their ships hoping for better times while avoiding bankruptcy, BIMCO's chief shipping analyst Peter Sand said in a tanker shipping report earlier in September.

There was little hope for tankers to achieve profitable freight rates on open trades in 2021, as demand in the Northern Hemisphere over winter, traditionally tanker shipping's strong season, is expected to remain weak, Sand said.

August
July
% change M/M
Low sulfur fuel oil 180 CST
1,752
1,746
0.34
Low sulfur fuel oil 380 CST
541,179
534,357
1.28
Marine fuel oil 380 CST
129,410
119,732
8.08
Marine gasoil
2,215
1,422
55.77
Low sulfur marine gasoil
28,662
28,153
1.81
Lubricants
4,345
4,929
-11.8
Total
707,563
690,339
2.5%

Unit: cubic meters