Fujairah delivered marine fuel 0.5%S bunker differential sinks to over 9-month low
23rd September 2021 08:26 GMT

The Fujairah-delivered marine fuel 0.5%S bunker differential against the 380 CST high sulfur fuel oil delivered assessments narrowed to over nine-month low of $75/mt on Sept. 22, Platts data showed, amid an oversupply of low sulfur fuel oil bunkers.

The spread was last narrower on Dec. 16, 2020 at $74/mt, the data showed.

Industry sources attributed the sluggish spread between the very low and high sulfur fuel oil grades to firmer Fujairah-delivered 380 CST HSFO bunker values and weak demand for the International Maritime Organization-compliant bunker fuel which kept inventories oversupplied.

"The month of September has been much quieter with slow-moving pace of bunker demand. Sales [of marine fuel 0.5%S] are nowhere near the volumes seen in August," a Fujairah-based trader said.

With Uniper and VTTI, the local producers of LSFO, running at full capacity, LSFO bunker supplies have outpaced demand, sources said.

As of Sept. 22, the premium of Fujairah-delivered marine fuel 0.5%S averaged $2.11/mt in September, down from an average of $2.50/mt in August, Platts data showed. The premium was assessed at $2.19/mt on Sept. 22, up 11 cents/mt from the previous day.

LSFO bunker sales at the UAE's Port of Fujairah, the world's third largest bunker hub, gained 1.27% on the month in August to hit 542,931 cu m, according to latest data from the Fujairah Oil Industry Zone provided exclusively to S&P Global Platts.

The data also recorded an 8.08% surge of 380 CST HSFO bunker sales on the month to 129,410 cu m in August.

On the other hand, industry sources said that the limited availability of HSFO bunkers have pushed up premiums since August, while delivery lead time has extended to at least 4-6 days ahead compared to prompt deliveries of 1-2 days ahead seen in July.

A Fujairah-based bunker supplier said that delivered 380 CST HSFO commands a "strong premium" amid steady demand, so suppliers have little incentive to offer at competitive valuations.

Margins for delivered 380 CST HSFO and low sulfur marine gasoil are much healthier than the tepid premiums seen for LSFO bunker deliveries, a second trader said.

Platts data showed that the premium of Fujairah-delivered 380 CST HSFO averaged $33.36/mt on Sept. 20-22, up from the previous week's average of $22.41/mt.

Bunkerworld .,
23rd September 2021 08:26 GMT