Sammy Six of global energy and commodity price reporting agency Argus Media on Thursday (18 March) published a summary on the market forces behind the record low bunker premiums seen in Singapore in March:
Weak demand, new entrants to the market and competitive bunker offers from oil majors are dampening delivered premiums of bunkers in Singapore.
The premium of delivered very-low sulphur fuel oil (VLSFO) over cargo prices fell to a record low of $5.75/t on 17 March, according to Argus data. The premium of delivered high-sulphur fuel oil (HSFO) over cargo prices also declined, to an even lower $3.25/t yesterday, also according to Argus data.
These low delivered premiums resulted from weak demand for ship fuel in the city-state.
“Premiums are really low these days, and the market has been too quiet for a long time now,” said one local supplier.
Argus reported an average of nine spot deals so far this week, down from an average of 13 last week. Argus on 17 March assessed VLSFO, HSFO and low-sulphur marine gasoil lower on the day, despite firmer Brent crude futures at 4.30pm in Singapore and fuel oil paper values.
“Crude prices are rising, but bunker prices are not revised upwards to the same extent,” said the same supplier.
Competitive prices from some companies are another cause for the low delivered premiums, with ex-wharf values sometimes below that of delivered fuel. Oil majors, who have several competitive advantages relative to their smaller counterparts such as being vertically integrated and having easier access to credit, are also drivers of price in the port.
New entrants to the market are pressuring incumbent companies, intensifying the already-competitive landscape in the world’s largest bunker hub. “Some of these companies prioritise gaining market share fast rather than competing on price,” said another local trader.
“The situation is similar for gasoil, with majors going all in on the delivered side when they deem ex-wharf premiums unattractive and vice versa,” according to another local supplier. “Now more than ever, companies will need to invest in new equipment, technology and peoples’ skill set and knowledge to overcome this volatile and uncertain environment characterized by low demand and upcoming alternative fuels.”
“The majors will be dominant, but they will still need to outsource part of the supply chain service such as barging and frontline services,” he added.
Singapore’s total bunker sales in 2020 rose by 5% to 49.83mn t, with 44 licensed suppliers, according to data from the Maritime and Port Authority.
Photo credit and source: Argus Media
Published: 19 March, 2021
Associate Director at Helmsman highlights the need to stay up-to-date with latest protocols / measures introduced by MPA, with continuous education of Master and crew of the visiting vessel.
BunkerPlanner Lite is an attempt to educate professionals engaged in bunker decisions about the use of advanced technology in the decision process, explains BunkerMetric CEO Christian Plum.
Senior Associate at Clyde & Co offers guidance to protect shipowners and bunker tanker operators in the event opposing counterparty breaches Covid-19 protocols, resulting in Covid-19 transmission.
Having a surveyor’s watchful eye to detect illegal activities also sends a strong signal to barge and vessel crew not to undertake any intended non-compliance, states VPS Senior Sales Manager.
Bunker tanker owner’s trust in LR and Metcore’s expertise proves duo’s experience in bunkering MFMs and unceasing support made the difference in ensuring trust during bunker transactions.
‘To be clear, the activities undertaken by Ang outside of Sea Hub are categorically unrelated to the current non-active status of the company,’ Glen Lim, Shipping Director of Sea hub, tells Manifold Times.
21 Jul 2021