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Price Assessment

FOB Straits Price Assessment

  • What is FOB Straits?
  • How we assess FOB Straits
  • Evolution of FOB Singapore to FOB Straits

What is FOB Straits?

Ports proximate to Singapore

As one of the world's busiest ports, Singapore naturally fills the criteria as a key base location for many of Platts oil products assessments. But the further expansion of Singapore's on-land oil storage is likely to be limited, while growth plans in nearby Johor and the Riau Islands mean trading of products – and the benchmarks that reflect that activity – has spilled beyond Singapore's traditional boundaries and into new frontiers.

It is vital that Platts assessments are able to capture the full range of trading activity in the market, and so Platts has decided to reflect those regional terminals as part of the Platts FOB Singapore oil benchmarks in a more integrated fashion — FOB Straits.

FOB Straits encompasses terminals beyond Singapore's borders. FOB Straits bids could be met with any approved terminal, whether in Singapore, Malaysia or, possibly at a later date, Indonesia, while similarly sellers could nominate any such terminal for a FOB Straits offer.

Based on data from International Enterprise (IE) Singapore, the port is the world's busiest bunkering port, importing about 5.5 million mt of fuel oil every month. Of that, about 3.5 million mt is sold as bunkers, and the remaining volume exported, mainly to China and Malaysia. The port also sees some 2.3 million mt of middle distillates and 1.2 million mt gasoline exported every month, to neighboring countries like Malaysia, Indonesia and Vietnam, with some reaching as far afield as Australia, Africa and even Europe.

As Asia's economic influence has grown, so Singapore's logistics have expanded over the past decade, with storage increasing within Singapore and trading reaching out to embrace terminals in Malaysia and Indonesia to accommodate higher volumes. Beyond Singapore, storage has mushroomed across Asia, as areas such as China's Zhuhai, Malaysia's Port Klang and South Korea's Ulsan, have responded to the same market signals.

Widening the list of ports that can serve as loading points for FOB oil products trades in the Singapore area provides a broader foundation for market liquidity, while retaining the advantages of a tight regional focus in the Asian oil products benchmarks.

It is a significant change, and Platts will continue to monitor the impact of deliveries from southern Malaysian terminals compared with deliveries from landed storage within Singapore.

The inclusion of FOB Straits in the geographical coverage of its FOB Singapore refined oil products benchmarks ensures Platts is well positioned to reflect growth in regional oil trading for years to come.

How we assess FOB Straits

Every working day, Platts' experienced market reporters talk to a wide range of active market participants from across the industry, including producers, end-users, traders and brokers. Platts assessments take into account firm bids and offers that meet Platts rigorous editorial guidelines, with an open and transparent price discovery process, known as the Platts Market on Close assessment process, bringing trading information into sharp focus, and displaying it openly for every interested party to see.

Malaysian terminals in the Platts MOC process

Platts currently considers in its FOB Singapore MOC process deliveries made from three southern Malaysian oil terminals: Pasir Gudang and Tanjung Langsat to the north east of the city state, and Tanjung Bin, to the west of Singapore. South Malaysia has been part of the FOB Singapore benchmark since January 2001, when the storage terminal at Pasir Gudang was introduced as a delivery point for transactions concluded in the Platts Market on Close assessment process. Most recently, from May 1, 2015, Pengerang Terminal to the North East of Singapore will be included as a delivery point for the FOB Singapore MOC process.

Since the start of 2013, there have been 86 trades, totaling 9.17 million barrels, reported through the Platts MOC process on an FOB Malaysia basis across the fuel oil, gasoil, jet fuel and gasoline markets.

Relevance, repeatability and transparency

All market activity is viewed in light of its market relevance, repeatability and transparency. Platts FOB Singapore and FOB Straits assessments reflect the repeatable, transactable price at 16:30:00 Singapore time precisely.

Evolution of FOB Singapore to FOB Straits

Platts actively studies the evolution of the geographical coverage of its FOB Singapore refined oil products benchmarks to ensure they are well positioned to reflect growth in regional oil trading for years to come.

The limited possibility of further expansion of Singapore's on-land oil storage, coupled with growth plans in nearby Johor and the Riau Islands, means trading of products – and the benchmarks that reflect that activity – will spill beyond Singapore's traditional boundaries and into new frontiers.

Singapore's storage capacity is a key reason for the country's status as Asia's leading oil trading hub. Accessible tanks are a vital part of the oil trading business, providing the infrastructure for storing products, blending and distribution. They are a key tool for traders to manage oil supply in volatile and unpredictable markets.

But there is a limited possibility of further expansion of Singapore's on-land oil storage. Further growth of Singapore's storage terminal market is expected to be curtailed by limited waterfront land availability. Government authorities of the land-scarce city have indicated a shift in priority to the higher value chemicals manufacturing sector, and have said they will no longer allocate any land for oil storage. In fact, perhaps the last, major storage project in the city moved below ground; the Jurong Rock Caverns storage project is slated for completion in 2016.

Capitalizing on flows of oil to and from the Southeast Asian region, the Malaysian government has announced plans to build close to 10 million cu m of oil storage by 2020. The growth of storage terminals beyond Singapore raises the question as to whether to include regional terminals as part of the FOB Singapore oil benchmarks in a more integrated fashion.

From July 1, 2015, Platts will be moving from FOB Singapore to FOB Straits. As a result, Platts will no longer publish FOB Singapore or FOB Malaysia bids, offers or transactions in its Market on Close assessment process – it will only publish bids and offers and transactions as FOB Straits.


Methodology and Specifications

Methodology and Specifications
Methodology and Specifications

Products and Services

See all oil products
See all oil products