Enes Tunagur of global energy and commodity price reporting agency Argus Media on Thursday (16 January) issued a report highlighting swelling inventory of low-sulphur fuel stocks in floating storage units off Singapore:
The IEA said there is between 7mn and 8m t of fuel oil compliant with the new sulphur emissions rules in floating storage off Singapore, the world’s largest marine fuels hub.
Onshore inventories are swelling too — stocks there, including high-sulphur fuel oil (HSFO) and product compatible with the International Maritime Organisation (IMO) rules, reached a seven-month high of 3.5mn t in the week to today, up from 3.4mn t in the prior seven days.
All this product at the world’s largest bunkering hub has not prevented shortages emerging. Marine insurer Standard Club said this week that availability is a concern there and in other regional ports. This could be because of constraints in bunker delivery infrastructure during the transition to low-sulphur fuels, as rapidly increasing demand for IMO-compliant products this year led to longer delivery times.
Any shortfall in Singapore could also be down to China sourcing compliant fuels from the hub. But China approved a tax rebate on fuel oil exports last week and this could result in Chinese 0.5% fuel oil exports to Singapore in coming months. Cargo prices of 0.5% fuel oil in Singapore have fallen by $30.25/t since the Chinese tax decision, to $570.50/t today, having reached an all-time high at $653.75/t on 6 January.
The IEA said vessels and bunker suppliers are largely favouring 0.5% sulphur fuel oil over marine gasoil (MGO) to comply with the rules that capped maximum sulphur content at 0.5% as of 1 January, and that concerns about quality and compatibility are fading. It said the narrowing spread between 0.5% sulphur fuel oil and MGO in the fourth quarter of 2019 supports this view.
The IEA said HSFO refining margins were stronger in Singapore than Europe, because of a higher number of very large crude carriers (VLCC) using exhaust gas scrubbers in Asia-Pacific to continue burning the dirty product.
Photo credit: Argus Media
Published: 17 January, 2020
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