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Refined Products, Maritime & Shipping, Fuel Oil
April 08, 2025
HIGHLIGHTS
LSFO differential at $14/mt premium on April 7
Zhoushan LSFO premiums likely to stay subdued in Q2
Singapore LSFO market well-supplied
The price differential of Zhoushan- and Shanghai-delivered low sulfur fuel oil versus the same grade delivered to Singapore widened to $14/mt on April 7, marking a more than three-month high, due to tighter barging availability at the Chinese ports.
The spread between the Asian ports flipped to a $2/mt premium on April 4, after largely remaining at a discount since mid-January. It was last assessed higher on Dec. 30, 2024 at $18/mt, Platts data showed. Platts is part of S&P Global Commodity Insights.
Tighter barging availability and congestion at Zhoushan buoyed spot offers in the week ended April 4, following a spell of poor weather in preceding weeks.
Some market participants said that anchorages around Zhoushan have been working through a ship backlog, as only a limited number are allocated for bunkering. However, the impact is expected to ease in the coming week, with others noting that barging operations have returned to normal.
Platts assessed the Zhoushan-delivered 0.5%S marine fuel bunker over benchmark FOB Singapore 0.5%S marine fuel cargo values at an average of $12.62/mt over April 1-7, up from an average of $3.44/mt in March.
In the longer term, the uptick is likely temporary, as market participants still expect Zhoushan LSFO spot prices to remain subdued in the second quarter, especially following China's release of a second batch of fuel oil export quotas totaling 5.2 million mt at the end of March.
"I think even for Q2, spot prices will still be relatively low," a local bunker supplier said.
Chinese refiners' LSFO production in April is expected to contract slightly due to heavy maintenance scheduled during the month but will likely remain above 1 million mt, an analyst at domestic information provider JLC said.
According to JLC data, China's LSFO output in March fell 19.9% year over year and 2.17% month over month to 1.125 million mt.
Meanwhile, Singapore remains well-supplied with delivered 0.5% sulfur marine fuel, supported by ample cargo availability to meet demand.
Platts assessed the Singapore-delivered 0.5%S marine fuel bunker premium over FOB Singapore 0.5%S marine fuel cargo values in the $8.91-$12.75/mt range over April 1-7, compared with $7.13-$12.89/mt in March.
Demand for LSFO delivered at the world's largest bunker port has seen a slight uptick in recent weeks, despite some end-users adopting a cautious, wait-and-see approach amid expectations of near-term market volatility.
Buying interest strengthened in early April, as the slump in the crude oil complex prompted some buyers to secure requirements at lower levels. However, other end-users held off, anticipating further declines in the fuel oil complex, led by upstream crude.
The LSFO supply overhang in Singapore is expected to shrink in April, with arbitrage arrivals projected to be significantly lower than in March. The arbitrage window was largely shut throughout March, likely leading to a draw-down in stockpiles this month, according to market sources.
However, as Zhoushan's barging and supply return to normal, the recent reprieve in regional competitive pressure may be short-lived, as increased competitive bunker offers could cap the Singapore LSFO bunker fuel market.
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