Futures contract premiums for 0.5%S ex-dock marine fuel cargoes at the North Asian bunkering port of Hong Kong fell in January, as abundant supplies of low sulfur fuel oil prompted some market players to actively clear their stocks earlier in the year. despite moderate downstream demand, a local bunker trader said on Jan. 13.
Ex-dock LSFO contracts for January packages were settled at a premium of around $27-$34/mt compared to the benchmark FOB Singapore Marine Fuel 0.5%S cargo value.
This price is lower than the package loaded in December, which signed at around $45-$49/mt due to stronger demand levels and sufficient supply to meet end user needs.
The LSFO complex could further weaken due to increased competition following the Chinese New Year holiday, as other regional ports in China begin to sell at more competitive premium prices.
“Often, Q1 [will be a] a little slower. Maybe there are a few [lull] before Chinese New Year, but [the market will change a lot when] Zhoushan started supplying very cheap LSFO,” said a local bunker supplier.
The January market appears to be sluggish even compared to the same period in 2024, with suppliers reporting reducing imports in the month in anticipation of slower uptake, reducing cargo volumes by around 20% compared to last January.
Others also note increasing competition, with suppliers vying for a slice of demand in the market.
“February is usually a slow month… we still have to wait until China [market] back to work [for] export [volumes to start moving]”Conversely, if exports don’t move, then the ships won’t move either, meaning they don’t buy bunkers,” added the local bunker supplier.
Platts assesses 0.5%S bunker marine fuel prices delivered to Hong Kong at an average premium of $4.32/mt compared to the same grade delivered in Singapore so far in January, compared with $31.36/mt in December, according to S&P Global Commodity Insights data. The spread was last assessed at minus 75 cents/mt at the Asian close on January 10.
Platts sees the value premium shipped to Hong Kong over FOB Singapore Marine Fuel 0.5%S cargoes fell to an average of $17.49/mt this month in January, down 60.59% from an average of $44.38/mt in December, based on Commodity Insights data . The premium was last assessed at $13.82/mt on January 10, up 81 cents/mt from January 9.
In terms of high-sulfur fuel oil, off-dock term contracts for January parcels were settled at a premium of around $24-$30/mt, lower than December and November levels, which were signed in the range of $32-$45/mt, according to the principal market. , with some saying they only got term contracts and no ex-dock requirements for the month.
Some suppliers believe there is potential for greater upside in the HSFO market starting in February.
“HSFO is slightly better than LSFO, because at least there is not too much competition between suppliers in Hong Kong, there are not many suppliers in Hong Kong who can supply HSFO. And competition from surrounding areas is not that tight. [Ports in] East and South China [are] selling at around a $20/mt premium, and so far, we still do [able to] repaired several HSFO points,” said a local bunker supplier.
“It could be that later the premium will increase [from February] …we don’t know what Donald Trump will do after the end of January. Another factor is whether there is one [more] sanctions or anything against Russia, that would impact the high sulfur fuel oil chain [globally]”added the same bunker supplier.
Platts assesses a premium for Hong Kong-bound HSFO 380 CST cargoes over FOB Singapore cargo values at an average of $25.74/mt so far in January, down from December’s average of $43.34/mt, based on Commodity data Insights.
Meanwhile, the futures contract premium for a January loading ex-Hong Kong dockside low-sulphur marine petroleum contract with a sulfur content of 0.1% to the FOB Singapore cargo value closed lower at $15-$19/mt, compared with $21/mt in December, amid relatively weaker demand compared to December, market players said.
Source: Platts
