Singapore-Fujairah LSFO bunker spread reaches parity due to weak demand recovery

The Singapore-Fujairah low sulfur fuel oil bunker spread reached parity after weakening to the lowest level in more than seven months, due to a slower-than-expected demand recovery at the world's largest bunker hub following the Lunar New Year holidays, ample supply and heightened competition among suppliers, according to traders.

Platts, part of S&P Global Commodity Insights, assessed the spread between the Singapore delivered marine fuel 0.5%S bunker price and the delivered grade in Fujairah at parity on Feb. 21, narrowing $2/mt from the previous session. The bunker spread between the two main hubs was last weaker at minus $4/mt on July 17, 2024.

Competitive offers around the North Asian bunker hub of Zhoushan have driven LSFO bunker prices to discounts compared with Singapore, traders said.

Platts assessed the Singapore-delivered marine fuel 0.5%S bunker premium over the benchmark FOB Singapore marine fuel 0.5%S cargo at $8.30/mt on Feb. 21, declining 49 cents/mt day over day. Singapore's LSFO bunker premium was last lower at $7.73/mt on Oct. 6, 2021.

The FOB Singapore marine fuel 0.5%S cargo's cash differential to the Mean of Platts Singapore marine fuel 0.5%S strip fell 58 cents/mt day over day to $3.75/mt on Feb. 21.

"Bunker premiums are not in a healthy range, and suppliers are suffering because most of the LSFO barging costs range from $6/mt to $7/mt," a Singapore-based trader said on Feb. 24.

The price spread between Singapore delivered marine fuel 0.5%S and the corresponding spot ex-wharf assessment narrowed to $4/mt over Feb. 3-21 from $7.25/mt in January.

"Depending on the supplier, some are now charging barging [fees] to cover the flat price," a second Singapore-based trader said, adding that some suppliers were focusing on smaller requirements rather than pursuing larger, competitively-priced inquiries.

In Fujairah, LSFO demand was mostly moderate or below average at times, limiting the upside potential for delivered valuations, which have consistently remained at single-digit premiums since the start of 2025.

Ample LSFO supply in January and February has also weighed on Fujairah's LSFO premiums, amid some replenishment flows sourced from neighboring Kuwait, with the latest cargo arriving in early February, according to industry sources.

"LSFO barge [schedules are] mostly seeing three to five days out," a Fujairah-based trader said, noting ample overall barge availability for prompt refueling dates.

Traders said suppliers were eager to offer LSFO stems competitively to fill their available prompt barge slots.

A VLCC-sized cargo, consisting of straight-run LSFO and other feedstock components, sourced from Nigeria's Dangote refinery, is expected to arrive in Fujairah in the week started Feb. 24, marking the first such replenishment flow since July 2024, according to industry sources.