Sammy Six and Maiko Nakashima of global energy and commodity price reporting agency Argus Media on Friday (5 February) published a summary on the possible outcomes of SK Energy’s decision to resume its HSFO bunker supply business on a trial basis:
South Korean refiner SK Energy restarted high-sulphur fuel oil (HSFO) bunker supply operations from late January, on a trial basis. The company is understood to be importing HSFO from Singapore.
SK Energy resumed HSFO supply at the end of January with a capacity of about 10,000 t/month, which could rise to 15,000-20,000 t/month, according to market sources. HSFO supply from the company might increase gradually in line with a rise in the number of scrubber-operated vessels.
More vessels are expected to install scrubbers this year as the premium of 0.5pc very-low sulphur fuel oil (VLSFO) over HSFO, also called the scrubber or Hi5 spread, has widened significantly over the past months. The premium in Singapore averaged $65/t from April to November 2020, and climbed to $118.50/t yesterday, according to Argus data.
GS Caltex was the only company in South Korea to supply HSFO after the International Maritime Organization’s sulphur cap regulations kicked in last year. The company supplies around 150,000 t/month, or 20-25pc of total bunker sales, in the country.
SK Energy is likely to offer at lower prices compared to GS Caltex, according to a Japanese bunker trader. SK’s re-entry into the market may make HSFO prices more competitive in Asia.
SK Energy has a total refining capacity of 1.115mn b/d at plants in Ulsan and Incheon. The company completed an upgrade at its 840,000 b/d refinery in Ulsan in March last year, which boosted its production of low-sulphur components to produce more VLSFO for its bunkering hubs across its southern ports.
Photo credit and source: Argus Media
Published: 8 February, 2021
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