China's June fuel oil imports may fall, HSFO demand stable
Mediterranean waits for Piraeus VLSFO consistency to even out
Weak demand in North America amid unclear direction from crude
Marine fuel markets lost some ground in the week ended May 25 amid mixed dynamics in crude markets and a lack of clarity in marine fuel markets.
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The S&P Global Commodity Insights Bunkerworld 0.5% sulfur fuel oil index ended the week May 25 at $568/mt, down $1/mt on the day, down $5/mt on the week and down $25/mt on the month. The BW380 index, which represents value for 3.5% sulfur fuel oil, ended the week at $469/mt, down $3/mt on the day, down $6/mt on the week and down $25/mt on the month.
Crude futures wavered on the week, drawing support from the US Energy Information Administration reporting an unexpected 12.5 million barrels decline in US crude inventories for the week ended May 19.
However, there have been headwinds as the ongoing impasse with the US debt ceiling negotiations and as Russia suggested no further production cuts were needed any time soon.
Bunker supplier Monjasa is seeing the most pronounced growth in bunker demand in Asia and the Americas, a company official said May 24.
"We recorded an increasing demand across all regions, however with the Americas and Asia leading the positive developments," Monjasa Group CFO Rasmus Knudsen told S&P Global Commodity Insights May 24.
The company's sales volumes rose 12% year on year in 2022 to 6.4 million mt, the company said in a May 23 statement, giving headline results for the year. Sales in 2022 were characterized by historically strong shipping markets, high volatility and disrupted global trade flows, the May 23 statement said.
In regional markets, China's fuel oil imports may fall in June after hitting a likely record high in May, with some traders estimating the drop to be as much as 50%, as lengthy wait times at customs and poor margins prompt refiners to reduce capacity or otherwise keep run rates low.
Traders have also noted more arbitrage cargoes are set to arrive in Asia in the coming months.
"We see more [3.5%S FO] cargoes from the Middle East are coming into the Singapore Straits... HSFO bunker demand is stable but not witnessing any major uptick," a trader said. "For the rest of May and the whole of June the HSFO market is looking weak."
In the Mediterranean, sources are waiting to see if the consistency of Piraeus 0.5%S FO improves amid a period of refinery maintenances. One trader believed the current inconsistency of product is down to poor logistical planning, but they anticipate discovering more information about Piraeus 0.5%S FO.
Retail marine fuel bunkers pricing in North America has spent much of the week faced with soft demand amid volatility in upstream crude and diesel segments, leading to less liquidity in already quiet markets.
For May, the US saw more 3.5%S FO activity within the market compared with 0.5%S FO.
The BW Indexes are weighted daily indexes made up of price assessments at 20 key bunkering ports. To obtain a representative geographical spread, the ports were selected by size with reference to their geographical importance.
The BW 0.5%S Index ports are Hong Kong, South Korea, Shanghai, Singapore, Japan, Las Palmas, Durban, Fujairah, Gibraltar, Piraeus, Rotterdam, St. Petersburg, Houston, Los Angeles, New York, Balboa and Santos.
The BW380 Index ports are Busan, Canary Islands, Colombo, Durban, Fujairah, Gibraltar, Hong Kong, Houston, Los Angeles, New York, Offshore Nigeria, Panama Canal, Piraeus, Rotterdam, Santos, Shanghai, Singapore, St. Petersburg, Suez and Tokyo.