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Argus Media: European 0.5pc fuel oil in demand in Asia-Pacific

24 Jun 2019

Global energy and commodity price reporting agency Argus Media in on Friday (21 June) provided a marine fuels industry related update:

Shell, Total and Russia's Litasco are seeking 0.5pc sulphur fuel oil in northwest Europe and the Mediterranean for shipment to Singapore, where it will be stored in preparation for the 2020 marine fuel sulphur cap.

The companies are each trying to source up to 130,000t of 0.5pc fuel oil for shipment to the world's largest bunkering hub, where companies have started storing in floating units.

It is unclear if any of the three has fixed a cargo. Single refiners are likely not ready to offer such quantities of 0.5pc product, but a typical Suezmax — capable of carrying 130,000t — has five segregated tanks on board, meaning a cargo be sourced from different sellers without concerns about mixing.

Storage demand for 0.5pc fuel oil in Europe has also picked up as implementation of the International Maritime Organisation (IMO) rules nears. This stronger demand outlook is shown in the structure of the 1pc cargo swaps market — the only liquid price indication for 0.5pc — which suggests higher prices towards the end of this year. Product for delivery in the fourth quarter closed yesterday at $397.25/t — a $10/t premium to product for delivery in the third quarter.

But European buyers could find sourcing easier soon because Europe's largest consumer, Euronav, will stop purchases after filling its floating storage. Euronav purchased at least 10 30,000t cargoes of 0.5pc fuel oil since March to store in its 443,000t ultra large crude carrier (ULCC). The firm most recently bid a $35/t premium to high-sulphur Rotterdam barges, equating to the outright price of $391/t on yesterday's close.

Italian refiners Iplom and Saras, Nigeria's Sahara and Israel's ORL sold cargoes to Euronav.

Source: Argus Media
Published: 24 June, 2019


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