Sammy Six of global energy and commodity price reporting agency Argus Media on Thursday (25 March) published a summary of how the recent congestion at the Suez Canal due to containership Ever Given running aground could positively impact the bunker demand in Singapore:
The congestion of the Suez Canal, caused by a stranded container ship, could lead to higher demand for bunkers in Singapore if vessels have to go around the Cape of Good Hope instead.
The Ever Given, owned by Taiwanese company Evergreen, ran aground yesterday and caused congestion in the Suez Canal. Reports that the vessel has been partially refloated could not be confirmed.
If the congestion is not resolved in the coming days, some ship owners will have to divert vessels around the Cape of Good Hope. This could result in higher demand for bunkers in Singapore given the longer journey, market participants said.
And if the situation drags on for weeks instead of days, prompt resupply of fuel oil cargo to Singapore is likely to tighten as supplies from Europe to Asia typically pass through the Suez Canal. Fuel oil cargoes from the US will be less impacted, as they sail on larger ships that go around the Cape.
“There could be a ketchup effect after the Canal gets cleared”, according to one Singapore-based trader.
Most market participants expect the situation to be resolved quickly, with minimum disruptions to the supply chain in Singapore.
Singapore is well supplied, with inventory levels for residues for the week ending yesterday totalling 22.3mn bl, down slightly from 22.8mn bl a week earlier, according to official data.
“High-sulphur fuel oil (HSFO) would likely tighten faster than very-low sulphur fuel oil as regional supplies are lower due to weaker cracks and upcoming summer demand for HSFO in the Arab Gulf,” said another local trader.
Photo credit and source: Argus Media
Published: 26 March, 2021
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