Rotterdam Hi-5 spread hits highest level since March
4th July 2022 14:24 GMT

The premium of VLSFO to HSFO in Rotterdam hit its second-highest level on record July 1, when the spread between the two bunker grades widened to $345/mt.

Tight VLSFO supply in Amsterdam-Rotterdam-Antwerp ports pushed premiums higher on the week, while HSFO markets weakened due to healthy supply.

Rotterdam delivered VLSFO was assessed at $900/mt July 1, up $57/mt on the week, while HSFO dropped $35/mt. The spread between the two grades was up 7% on the day July 1.

The premium for VLSFO -- or Hi-5 spread -- has only been recorded higher March 9, when the impact of the war in Ukraine pushed premiums to $392/mt.

Suppliers said that scarcity of non-Russian blending components for the VLSFO pool had limited availability of the fuel grade at refineries.

Meanwhile, higher premiums for VLSFO in the Mediterranean had pulled cargoes away from Northwest Europe, leaving suppliers in Rotterdam starved of product.

“We’re not expecting to be able to offer anything prompt until July 15 [at the] earliest,” said one Rotterdam-based supplier, who added that congestion loading at refineries had added to delays. The supplier said that premiums over $300/mt were “not sustainable,” but expected spreads to remain high for several weeks.

A second supplier also said that VLSFO stocks were unlikely to be replenished until mid-July. The second supplier added that “HSFO is looking very good,” and remains well-supplied.

According to Kpler shipping data, Russian HSFO has continued to flow into the Amsterdam-Rotterdam-Antwerp hub despite the announcement of EU sanctions effective 2023.

The data showed HSFO imports rising 287% on the week beginning June 27, with 890,000 barrels originating from Russia.

“We are still seeing Russian product blended into HSFO markets, especially on the bunker side of things, and some companies are still taking Russian RMG as a bunker fuel,” said one fuel oil source.

Tightness in the VLSFO complex appears isolated to Amsterdam-Rotterdam-Antwerp ports in the near-term as suppliers elsewhere in Northwest Europe are yet to report any shortages.

Bunkerworld .,
4th July 2022 14:24 GMT