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ENGINE: East of Suez Bunker Fuel Availability Outlook (12 Dec 2023)

VLSFO availability tight in Singapore; LSMGO and HSFO supply good in Zhoushan; strong bunker demand in Fujairah.

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RESIZED ENGINE East of Suez

The following article regarding regional bunker fuel availability outlook for the East of Suez region has been provided by online marine fuels procurement platform ENGINE for publication on Singapore bunkering publication Manifold Times:

  • VLSFO availability tight in Singapore
  • LSMGO and HSFO supply good in Zhoushan
  • Strong bunker demand in Fujairah

Singapore

Singapore has been witnessing “sluggish” demand so far this week. VLSFO supply continues to remain under pressure in the port, with lead times varying widely between 6-14 days. A source claims at least seven bunker suppliers are currently grappling with tight delivery schedules in the port. Lead times of 12-16 were advised for the grade last week.

Availability of HSFO has improved in the Southeast Asian bunker hub, with lead times coming down from more than 14 days last week to 7-9 days now. LSMGO supply remains good, with almost unchanged lead times of 3-5 days.

Singapore’s residual fuel oil stocks have come down slightly in the first week of December from November levels, according to Enterprise Singapore. The port’s net fuel oil imports have plunged 76% so far in December. Both fuel oil imports and exports have declined this month. Its fuel oil imports have slumped 57% so far this month, while its exports have dipped 2%.

The port’s middle distillate stocks, on the other hand, have averaged 11% lower so far this month than in November.

China, East Asia and Oceania

VLSFO availability has shown signs of improvement in Zhoushan, with most suppliers now recommending lead times of 5-7 days. This comes after the grade was subject to enquiry last week. Despite the improvement in supply, the demand for the grade remains low because of the high premiums quoted by some suppliers, making it unattractive for buyers to bunker them.

LSMGO and HSFO supply remain good in the Chinese bunker hub, with short lead times of 2-5 days.

Meanwhile, the northern Chinese port of Dalian has good availability of VLSFO and LSMGO. The nearby port of Tianjin also has a good supply of VLSFO, but the availability of LSMGO and HSFO remains under pressure and deliveries are subject to enquiry. Prompt availability of VLSFO and LSMGO remains tight in the other northern Chinese port of Qingdao, and HSFO remains subject to enquiry there.

Both grades remain tight for prompt supply in the southern Chinese ports of Shanghai and Xiamen. HSFO availability continues to remain under pressure in Shanghai, as it has been in recent weeks.

LSMGO supply is tight in Guangzhou, but VLSFO availability remains good there. Both grades remain subject to enquiry in the southeastern port of Fuzhou.

Yangpu port, on the other hand, has good availability of both grades.

All grades remain in ample supply in Hong Kong, with unchanged lead times of 5-7 days recommended. Bad weather is forecast in Hong Kong on Wednesday and Saturday, which might disrupt bunker deliveries at the port.

Strong winds and high waves are predicted to hit the South Korean ports of Ulsan, Onsan, Busan, Daesan, Taean and Yeosu intermittently between Tuesday and Sunday, which might hamper bunker deliveries at these ports.

Meanwhile, supply of all grades has improved in South Korean ports, with lead times coming down from 5-12 days last week to 3-9 days now.

Availability of all grades has improved in Japan’s Tokyo as well, with lead times of 7-10 days - down from 10-12 days last week.

Most suppliers in Japan will accept new bunker orders until 20 December, before the beginning of the Christmas and New Year holidays, the source adds.

Tropical cyclone Jasper, which is moving north-westwards toward Queensland coastline, Australia, is predicted to make landfall on Wednesday between Cooktown and Innisfail.

Port operations were suspended in Cape Flattery, Cairns and Mourilyan on Tuesday due to the cyclone, while terminals at the ports of Abbot Point and Hay Point ceased vessel operations, according to GAC Hot Port News.

Warning has been issued in areas between Cape Flattery to Townsville (not including Townsville), which includes the port of Palm Island. Authorities will also keep an eye on potential disruption around the area between Cape Melville to Cape Flattery.

Adverse weather conditions are also forecast in the Philippine port of Subic Bay between 13-15 December, and in the Kiwi port of Tauranga between 12-14 December, which may hamper bunkering operations.

South Asia

VLSFO and LSMGO supply remains good in Kandla on India’s northwest coast, with some suppliers advising short lead times of 2-3 days.

Both grades remain in tight availability in several Indian ports including Mumbai, Chennai, Cochin, Visakhapatnam, Paradip and Haldia, with deliveries subject to availability in these ports. Bunker deliveries remain subject to enquiry in Tuticorin on the southeast coast as it has been in recent weeks.

Bad weather conditions are forecast in the Sri Lankan port of Colombo on Wednesday, which may impact bunkering.

Middle East

Prompt availability is tight for all grades in Fujairah because of the robust bunker demand in the port. Lead times of 7-10 days are recommended for all grades, while some suppliers are still able to offer the grades for prompt dates, a source says.

Most suppliers in the other UAE port of Khor Fakkan can deliver bunker stems by 15 December at the earliest, the source adds.

By Tuhin Roy

Photo credit and source: ENGINE
Published: 13 December, 2023

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Wind-assisted

Singapore: EPS orders its first wind-assisted propulsion system for tanker

Firm signed a contract for its first ever wind-assisted propulsion system, partnering with bound4blue to install three 22-metre eSAILs® onboard “Pacific Sentinel”.

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Singapore: EPS orders its first wind-assisted propulsion system for tanker

Singapore-based Eastern Pacific Shipping (EPS) on Thursday (22 February) said it signed a contract for its first ever wind-assisted propulsion system, partnering with bound4blue to install three 22-metre eSAILs® onboard the Pacific Sentinel

The turnkey ‘suction sail’ technology, which drags air across an aerodynamic surface to generate exceptional propulsive efficiency, will be fitted later this year, helping the 183-metre, 50,000 DWT oil and chemical tanker reduce overall energy consumption by approximately 10%, depending on vessel routing.

Suitable for both newbuilds and retrofit projects, the system delivers energy efficiency and cost savings for a broad range of vessels, regardless of their size and age.

Singapore: EPS orders its first wind-assisted propulsion system for tanker

José Miguel Bermudez, CEO and co-founder at bound4blue, said: “Signing an agreement with an industry player of the scale and reputation of EPS not only highlights the growing recognition of wind-assisted propulsion as a vital solution for maximising both environmental and commercial benefits, but also underscores the confidence industry leaders have in our proven technology.”

“It’s exciting to secure our first contract in Singapore, particularly with EPS, a company known for both its business success and its environmental commitment.”

“We see the company as a role model for shipping in that respect. As such this is a milestone development, one that we hope will pave the way for future installations across EPS’ fleet, further solidifying our presence in the region.”

Cyril Ducau, Chief Executive Officer at EPS, said: “EPS is committed to exploring and implementing innovative solutions that improve energy efficiency and reduce emissions across our fleet.” 

“Over the past six years, our investments in projects including dual fuel vessels, carbon capture, biofuels, voyage optimisation technology and more have allowed us to reduce our emissions intensity by 30% and achieve an Annual Efficiency Ratio (AER) of 3.6 CO2g/dwt-mile in 2023, outperforming our emission intensity targets ahead of schedule. The addition of the bound4blue groundbreaking wind assisted propulsion will enhance our efforts on this path to decarbonise.”

“With this project, we are confident that the emission reductions gained through eSAILs® on Pacific Sentinel will help us better evaluate the GHG reduction potential of wind assisted propulsion on our fleet in the long run.”

Pacific Sentinel will achieve a ‘wind assisted’ notation from class society ABS once the eSAILs® are installed. 

 

Photo credit: Eastern Pacific Shipping
Published: 23 February, 2024

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VLSFO

Integr8: European VLSFO bunker fuel prices are worth watching

Research contributor Steve Christy explains what is behind the steep rise in European VLSFO prices relative to markets elsewhere in the world and where the Rotterdam VLSFO price may go in the coming weeks.

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Integr8: European VLSFO bunker fuel prices are worth watching

By Steve Christy, Research Contributor, Integr8 Fuels
[email protected]  

22 February 2024       

Recent uptick in oil prices; but for temporary reasons

There are mixed signals driving the absolute price of oil at the moment, with a slightly more bullish push over the past two weeks. But, to put it in context, this recent uptick followed a sharp drop in prices at the end of January and into the first few days of February, when Brent crude fell from $82/bbl to $77/bbl. The ‘bullish’ push in the past two weeks has only brought Brent back to $82/bbl.

Looking at very low sulphur fuel oil (VLSFO) prices in Singapore and Fujairah, these have traded in a narrow $25/mt range so far this month and are still lower than their end January levels (and $35-40/mt lower than average November prices). This is not the case in Rotterdam.

Integr8: European VLSFO bunker fuel prices are worth watching

Behind these price movements there have been some temporary bullish factors in the oil industry so far this year. Arctic weather conditions in North America shut in around 0.9 million b/d of oil production and halted around 1.7 million b/d refinery operations. At the same time, there have been planned, heavy maintenance programs in the Atlantic Basin refining industry running through January and into February. This again has restricted product availabilities and led to lower stock levels. But these are temporary issues!

On the bearish side, in recent reports we have focused on the weak prospects for oil demand this year, and this is still in play, especially when you look at the International Energy Agency’s (IEA) latest forecast for 2024. Also, gains in non-OPEC production look as though they will be high this year, and the recent cuts in OPEC+ production have been limited to only 0.2-0.3 million b/d from December levels. Therefore, the fundamentals for this year would indicate a ‘lid’ on prices. This, plus the ability of the industry to work around the attacks on Red Sea shipping, has so far superseded the heightened political events and risks in the Middle East region.

European VLSFO prices are ‘more exposed’

From the chart above, Rotterdam VLSFO prices have risen more steeply than in Singapore and Fujairah over the past two weeks. Rotterdam VLSFO prices are around $50/mt higher than in early February, and unlike the other major bunkering hubs, Rotterdam prices are higher than we have seen so far this year, and some $10/mt above their November average.

Back in November, Rotterdam VLSFO was priced at around $580/mt and Singapore at around $680/mt, i.e. a differential of $100/mt. Between then and now Singapore prices have fallen by $40, but Rotterdam prices have gone in the opposite direction and are around $10 higher. The net result is that the differential between the two markets has narrowed from $100- to $50/mt.

 

 

 

 

 

 

 

 

graph 2 (1)

VLSFO pricing related to middle distillate pricing

The nature of VLSFO means supply and price movements are closely related to what is happening in other products. The chart below shows the close relationship between Rotterdam VLSFO and NW European diesel prices.

graph 3 (2)

The European VLSFO market looks like it will only get tighter

Europe is naturally short in the middle distillates of jet, diesel, and gasoil and so highly dependent on imports. The European sector had already been under pressure since the embargo on Russian supplies. However, the situation has tightened even further with the attacks on shipping in the Red Sea. These latest developments have hit diesel and jet shipments from the Middle East and India to Europe, with a leap in freight costs, longer voyage times via the Cape of Good Hope and tighter market conditions in Europe.

This loss of these supplies from east to west has partly been made up by an increase in diesel exports from the US to Europe. However, this may be short-lived as US refinery turnarounds in the first quarter cut availabilities and potentially limit diesel exports. Hence, European diesel (and so VLSFO) prices are likely to rise relative to VLSFO markets elsewhere in the world.

To compound this even more, Ukraine drone attacks on Russian refineries may have affected operations and so diesel exports from the country. Although this will not have a direct impact on the European diesel position, there is an indirect consequence, with other buyers of Russian products left short and having to source supplies from elsewhere, which will be in direct competition with European buyers.

Add to this a number of major European refineries going into turnaround in the north and Med regions, and the market is potentially even tighter!

If this isn’t enough, then there is a further layer to add to the argument; and that is the current exceptionally low distillate stock levels in Europe. The graph below shows the five year high/low range for middle distillate stocks in Europe, and that for the past two years stocks have been well below their five year average. More importantly, over the past three months stocks have been below their previous five year lows, and this is at a stage when we expect the market to tighten even further.

graph 4 (1)

Whatever happens, Rotterdam VLSFO prices are likely to be relatively high

All else being equal (it never is!), the fundamentals point towards a more bearish oil market, but with this relative strengthening in European VLSFO prices.

Beyond the fundamentals, the geopolitical risks at the moment clearly lie in the Israel/Gaza position and developments surrounding Iran. But there are also a number of elections this year that will contribute to more uncertainty, not least in the US.

However, as things pan out, the European distillate market does look tight going forward and this would mean relatively higher VLSFO prices in Rotterdam, and Europe generally.

 

Photo credit: Integr8 Fuels
Published: 23 February, 2024

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LNG Bunkering

Galveston LNG Bunker Port joins SEA-LNG coalition

SEA-LNG said move will further enhance its LNG supply infrastructure expertise and global reach, while giving GLBP access to the latest LNG pathway research and networking opportunities.

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Galveston LNG Bunker Port joins SEA-LNG coalition

Galveston LNG Bunker Port (GLBP), a joint-venture between Seapath Group, one of the maritime subsidiaries of the Libra Group, and Pilot LNG, LLC (Pilot), a Houston-based clean energy solutions company, has joined SEA-LNG, according to the latter on Wednesday (21 February). 

SEA-LNG said the move will further enhance its LNG supply infrastructure expertise and global reach, while giving GLBP access to the latest LNG pathway research and networking opportunities.

GLBP was announced in September 2023 and will develop, construct and operate the US Gulf Coast’s first dedicated facility supporting the fuelling of LNG-powered vessels, expected to be operational late-2026.

The shore-based LNG liquefaction facility will be located on Shoal Point in Texas City, part of the greater Houston-Galveston port complex, one of the busiest ports in the USA. This is a strategic location for cruise ship LNG bunkering in US waters, as well as for international ship-to-ship bunkering and cool-down services. GLBP will offer cost-effective turn-key LNG supply solutions to meet growing demand for the cleaner fuel in the USA and Gulf of Mexico.

Jonathan Cook, Pilot CEO, said: “With an initial investment of approximately $180 million, our LNG bunkering facility will supply a vital global and U.S. trade corridor with cleaner marine fuel. We recognise that SEA-LNG is a leading partner and a key piece of the LNG bunkering sector, and will give us access to insights and expertise across the entire LNG supply chain.

“LNG supports environmental goals and human health by offering ship operators immediate reductions in CO2 emissions and virtually eliminating harmful local emissions of sulphur oxides (SOx), nitrogen oxides (NOx) and particulate matter.”

President of Seapath, Joshua Lubarsky, said: “We are very pleased to be supporting the decarbonization of the maritime industry through strategic, and much needed, investments into the supply of alternative fuels.  We are also happy to be a part of SEA-LNG which has done a wonderful job in advocating for advancements in technology in this vital sector.”

Chairman of SEA-LNG Peter Keller, said: “We’re proud to welcome another leading LNG supplier to the coalition and are looking forward to a mutually beneficial relationship. With every investment in supply infrastructure in the US and worldwide, the LNG pathway’s head start increases. Global availability, alongside bio-LNG and e-LNG development, makes LNG the practical and realistic route to maritime decarbonisation.

“All alternative fuels exist on a pathway from grey, fossil-based fuels to green, bio or renewable fuels. Green fuels represent a scarce resource and many have scalability issues, so we must start our net-zero journey today with grey fuels. LNG is the only grey fuel that reduces greenhouse gas emissions, well-to-wake, so you need less green fuel than alternatives to improve emissions performance.”

 

Photo credit: SEA-LNG
Published: 23 February, 2024

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