Kayla Meyertons of global energy and price reporting agency Argus Media on Thursday (20 February) issued a report discussing the impact of Coronavirus on USGC to Singapore fuel oil arbitage:
The coronavirus outbreak has effectively shut arbitrage to export US Gulf coast fuel oil to Singapore as it devastated bunkering demand across Asia.
Chinese bunkering demand has tanked in recent weeks as the novel coronavirus reduced maritime trade flows. Bunker demand typically recovers after the lunar new year holiday, but this year it has not. Demand in Singapore, the world’ largest marine refueling hub for vessels, has also shown little improvement. By some estimates, demand for 0.5% low-sulphur fuel oil (LSFO) from Chinese ports may fall by 10-20% until the virus outbreak is curbed.
Softer fuel oil demand in Asia has shut any LSFO arbitrage for US Gulf coast refiners looking to profit overseas as domestic market activity plummeted.
US Gulf coast 0.5% sulphur fuel oil averaged at $69/t below Singapore LSFO values in January. The discount has since narrowed to an average of $31/t so far in February. Gulf coast LSFO even rose to a $8/t premium over Singapore for the first time since late November earlier this week.
US Gulf coast LSFO activity has already been suppressed as a result of high inventories, and the coronavirus has not made much additional impact, some market participants say.
Gulf residual fuel oil stocks averaged at 17.2mn bl in January, up by 5% from year-earlier levels, according to the US Energy Information Administration.
Recent fog-related closures of the Houston Shipping Channel slowed ship loading, causing shipowners to build up fuel oil inventories. Slower ship traffic also curbed fuel oil demand in the US Gulf coast, in addition to minimal activity prolonged by the recent US President’s Day long weekend.
The arbitrage to Singapore could reopen if Singapore LSFO stockpiles decline. Singapore accumulated a large LSFO stockpile last year in anticipation of the International Maritime Organization’s (IMO) January 1 sulphur cap. The International Energy Agency (IEA) estimates LSFO or fuel oil components to be 7-8mn t in floating storage around the larger Singapore area
The full impact of the coronavirus outbreak on Asia-Pacific bunker fuel demand remains unclear. As demand remains depressed, the arbitrage is likely to remain closed.
Photo credit and source: Argus Media
Published: 21 February, 2020
Delivered premiums in Singapore or China not expected to fall back to more typical levels anytime soon.
Lim claimed the documents were “mistakenly” issued, and as he was unaware of the process, he would not be liable for HSBC’s losses, reports Bloomberg.
Association of Bunker Industry (Singapore) organises free admission event 2020: Are You Prepared? on 26 November at Novotel Clarke Quay.
Hong Kong bunker market facing increasing pressure from rival Shanghai, notes representative of NewOcean Energy Holdings.
Reporting agency analyses Maersk’s marine fuel consumption strategy in preparation for the IMO 2020 transition.
‘Collection and distribution’ and ‘dual dynamic warehousing’ models to save cost for Chinese bunkering firms.
The top three positive movers in the 2020 bunker supplier list are Hong Lam Fuels Pte Ltd (+13); Chevron Singapore Pte Ltd (+12); and SK Energy International (+8), according to MPA list.
‘We will operate in the Singapore bunkering market from the Tokyo, with support from local staff at Sumitomo Corporation Singapore,’ source tells Manifold Times.
Changes include abolishing advance declaration of bunkers as dangerous cargo, reducing pilotage fees on vessels receiving bunkers, and a ‘whitelist’ system for bunker tankers.
Claim relates to deliveries of MGO to the vessels Pacific Diligence, Pacific Valkyrie, Pacific Defiance, Crest Alpha 1, and Pacific Warlock between March 2020 to April 2020.
3,490 mt of LSFO from Itochu Enex was lifted at Universal Terminal; the same bunker stem was bought by Global Marine Logistics and delivered by bunker tanker Juma to receiving vessel Kirana Nawa.
Representatives of Veritas Petroleum Services, Maersk, INTERTANKO, ElbOil Singapore, and SDE International provide insight from their respective fields of expertise on what lies ahead.
