Zhoushan's June ex-wharf LSFO term narrows slightly on month

June term contractual ex-wharf 0.5%S marine fuel cargoes at China's largest bunkering hub of Zhoushan narrowed slightly on the month to about $8-$10/mt to the benchmark FOB Singapore 0.5% marine fuel cargo values, sitting at the lower end of May terms inked at about $8-$12/mt, traders said May 31.

Barging fees eased on the month to about $6-$7/mt, market sources said, from $10/mt for May, when barging availability was drastically tightened amid a government crackdown on barges due to alleged oil smuggling.

It is unclear whether the situation has normalized, a source said, pending further information from the local barging association and port authorities.

Premiums for Zhoushan-ex wharf marine fuel 0.5% bunker over FOB Singapore marine fuel 0.5% cargo values turned negative mid-May, averaging at a discount of $1.34/mt for the month to date in May, from the average premium of $5.13 in April, S&P Global Commodity Insights data showed.

Platts assessed the discount 79 cents/mt on May 30, easing on the day from a discount of $3.42/mt, Commodity Insights data showed. The premiums dove to a discount of $9.01/mt on May 21, a low not seen since August 2023, when they were assessed at a discount of $9.18/mt.

Returns for ex-wharf may be squeezed given that delivered LSFO premiums were heard at about Mean of Platts Singapore plus $5-$10/mt, a source said, which would translate to "no margins if [we] buy ex-wharf [LSFO]".

Premiums for Zhoushan-delivered marine fuel 0.5% bunker over FOB Singapore marine fuel 0.5% cargo values averaged $6.71/mt for the month to date in May, sliding from an average of $10.03 in April, Commodity Insights data showed.

LSFO output at China's refineries dropped 11.8% on the month from March to 1.23 million mt in April, due mainly to heavy scheduled maintenance from state refineries, according to data from local energy information provider JLC.

April's output, however, was still 14.8% higher from a year earlier, the data showed.

May output is likely to recover slightly with less maintenance curbing levels, although demand for the fuel will likely remain capped without much upward momentum, a JLC analyst said.

On the high sulfur fuel front, June ex-wharf term contract prices were done at around $30/mt to the benchmark FOB Singapore 380 CST cargo values, on the upper end of the $25-$30/mt range for April parcels due to delayed cargo delivery, a source said.

Market sources have largely concurred that while LSFO stockpiles are ample, HSFO supplies have been very tight.

Premiums for Zhoushan-delivered 380 CST high sulfur fuel oil over benchmark FOB Singapore 380 CST HSFO cargo premiums have been on the rise in May, averaging $23.52/mt month to date, increasing from an average of $17.07/mt in April, Commodity Insights data showed.