Hong Kong's ex-wharf LSFO, HSFO term premiums soften in Jan on ample supply

Term contractual premiums for ex-wharf 0.5%S marine fuel cargoes at the North Asian bunkering port of Hong Kong fell in January, as very ample supply of low sulfur fuel oil prompted some market participants to actively clear their stocks at start of the year, despite moderate downstream demand, local bunker traders said Jan. 13.

Term ex-wharf LSFO contracts for January parcels were concluded at premiums of around $27-$34/mt to benchmark FOB Singapore Marine Fuel 0.5%S cargo values.

This was lower than December-loading parcels, which were inked at around $45-$49/mt due to stronger demand levels and sufficient supply to meet end-user requirements.

The LSFO complex could further soften on increasing competition after the Lunar New Year holidays, as other regional ports in China begin selling at more competitive premiums.

"Most of the time, Q1 [will be a] little bit slower. There could be a slight [lull] before the Lunar New Year, but [the market will change a lot when] Zhoushan starts to supply very cheap LSFO," a local bunker supplier said.

The January market is seemingly softer even compared with the same period in 2024, with supplier reporting cutting back on imports for the month in anticipation of the slower uptake, taking about 20% less cargo volumes compared with last January.

Others also noted increased competition, with suppliers vying for the few inquiries in the market.

"February is usually another slow month... we still have to wait until the China [market] gets back to work [for] export [volumes to start moving], otherwise, if exports are not moving, then ships are not moving, that means they are not buying bunkers," the same local bunker supplier added.

Platts assessed Hong Kong-delivered marine fuel 0.5%S bunker prices have averaged a $4.32/mt premium to the same delivered grade in Singapore so far in January, compared with $31.36/mt in December, S&P Global Commodity Insights data showed. The spread was most recently assessed at minus 75 cents/mt at the Jan. 10 Asian close.

Platts assessed the Hong Kong-delivered premium over FOB Singapore Marine Fuel 0.5%S cargo values fell to an average of $17.49/mt month to date in January, down 60.59% from an average of $44.38/mt in December, Commodity Insights data showed. The premium was most recently assessed at $13.82/mt on Jan. 10, up 81 cents/mt from Jan. 9.

On the high sulfur fuel oil front, term ex-wharf contracts for January parcels were concluded at premiums of around $24-$30/mt, lower than December's and November's levels, which were inked at around $32-$45/mt, according to market participants, with some saying they secured only delivered term contracts and no ex-wharf terms for the month.

Some suppliers believe there is potentially more upside for the HSFO market from February.

"HSFO is slightly better than LSFO, because at least competition among the Hong Kong suppliers is not that much, not many suppliers in Hong Kong can supply HSFO. And competition from surrounding areas is not that intense. [Ports in] East and South China [are] selling at roughly around premiums of $20/mt, and so far, we are still [able to] fix some spot HSFO," a local bunker supplier said.

"It might be that the premiums will hike up later [from February] ... we don't know what Donald Trump will do after the end of January. Another factor is whether there are [more] sanctions or whatsoever against Russia, which would affect the high sulfur fuel oil chain [globally]," the same bunker supplier added.

Platts assessed the premium for Hong Kong-delivered 380 CST HSFO cargo 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, Commodity Insights data showed.

Meanwhile, term contractual premiums for January-loading Hong Kong ex-wharf low sulfur marine gasoil contracts with a sulfur content of 0.1% to the FOB Singapore cargo value were concluded lower at $15-$19/mt, compared with $21/mt in December, amid relatively weaker demand compared with December, market participants said.