Elshan Aliyev of the global energy and commodity price reporting agency Argus Media on Friday (5 June) published an analysis of bunker sales and premiums at Fujairah being squeezed as they narrow in a well-supplied market despite the rise in oil prices:
Marine fuel sale volumes at the Middle East’s main bunkering and storage hub of Fujairah, UAE, fell in May and in the first week of June.
Bunker sellers at the port linked the lower demand levels to the effects of the Covid-19 pandemic and to rising prices, which have been following crude higher.
“We have seen a fall in bunker demand because of Covid-19. The impact was less evident in March and April because contractual obligation had to be implemented. A number of vessels are stuck in [Asia-Pacific] and that is one of the reasons why we saw such a fall in May,” a bunker trader said.
Demand was partly curtailed because some larger tankers have been used as floating storage in the absence of vacant onshore capacity, meaning they did not need to use fuel. Stocks of various products have been high at Fujairah’s 10mn m³ of onshore storage in recent weeks, according to storage operators.
Fujairah does not publish official statistics, but the total amount of marine fuels involved in deals reported to Argus fell by around 11% in May from April, to 170,000t. Argus assesses delivered bunker stems for 0.5% very low-sulphur (VLSFO), high-sulphur fuel oil (HSFO) and low-sulphur marine gasoil (LSMGO) based on deals submitted by bunker suppliers, traders and vessel firms.
The amount of delivered VLSFO bunkers, the prevalent grade sold at Fujairah, fell by 16% on the month in May to 150,000t, as reported by market participants. Demand rose for HSFO 380cst fuel oil in May, with reported sales rising by more than 50% to 16,000t.
Overall demand may be lower because buyers choose to refuel in Singapore, to take advantage of the narrowing Singapore-Fujairah price spread from premiums of above $20/t in early May to parity or even small discounts from the middle of the month.
An increase in crude and cargo prices may have led bunker buyers to be more cautious in deciding the size of their purchases. As the average weekly VLSFO price rose from $191.50/t in early May to $262.50/t on 29 May, more bunker deals were fixed for small- and medium-sized cargoes, ranging as low as 150t and as high as 700t.
Although price rose, bunker sellers became increasingly anxious of premiums being squeezed in a well-supplied market. Suppliers typically sell cargoes at a discount to Singapore 10ppm gasoil spot assessments. At the start of May the discount was around -$12-14/t, some deals during the last week of the month were fixed at $27-35/t below the 10ppm gasoil prices. In the first week of June, the discounts were at -$40-45/t.
“When someone bid at a $45/t discount, I responded ‘I will buy from you at that price rather than sell.’ I shut my laptop and stopped working on that day,” a bunker supplier said.
Photo credit and source: Argus Media
Published: 8 June, 2020
The local bunkering sector has adapted to IMO 2020 requirements and LSFO is now available at more than two earlier locations, notes bunker supplier Trillion Energy.
Claiming USD 108,887.87 for the supply and delivery of 310.00 mt of low sulphur marine gas oil at the Port of Jeddah on or about 23 February 2020.
A sanitisation expert offers Manifold Times a summary of the processes involved in disinfecting a ship together with the equipment and products used in the operation.
‘As the saying goes without people buying things, manufacturing will slow, trade will also slow and shipping movements slows down. It’s a whole chain of reaction,’ says Simon Neo.
Laboratory looking to collaborate with Singapore bunker surveyors to roll out COVID 19 testing service, which has been successfully adopted by land-based industries, to the maritime sector.
Sinfeng Marine Services filed an application to the Court of Appeal to withhold information from the liquidators on October 2019; the appeal was dismissed a month later.