Bunker demand across Indian, Sri Lankan ports mixed in June amid seasonality

India

Bunker demand for very low sulfur fuel oil at Indian ports remained mixed in June with the arrival of Southwest monsoon.

West-coast India, which makes up for most of the bunker demand in the country saw a good flow of inquiries throughout June supported by increased availability of product, traders said.

"The demand across the Indian bunker market is strong, and availability has returned to normal levels across all ports," a Mumbai-based trader said.

In June, the number of ship-to-ship and bunkering operations at Mumbai increased by 24% year on year to 445, S&P Global Commodities at Sea data showed.

"We are receiving sufficient inquiries, indicating a robust demand at Indian ports, averaging around 4000-5000 mt/day", the trader said.

"Demand was good in June, but the availability of HSFO was limited, so we had to let go of that high sulfur demand. There has been a continued surge in HSFO requirements. In terms of overall volumes for the Gujrat coast, we did around 50,000 mt. We will be getting a parcel of imported HSFO soon which will help relieve the supply tightness for the product", said a Gujrat-based trader.

The port of Kochi, which is among the first regions in India to receive south-west monsoon rains saw a stable demand in June amid strong product flow and minimal weather-related disruptions.

According to CAS data, total Ship-to-Ship and bunkering operations at the port rose 10% month on month to 93 in June, up from 29 in June 2023.

"Both BPCL and IOCL have good product avails. We are good to go with no cancellations as of now, barring any disruptions that monsoon may cause", a Kochi-based supplier said.

"When compared to last year, our volumes had almost doubled last month as the market knew that we had got a good flow of products. The number of inquiries had also increased. Total volumes at the port were upwards of 23,000 mt in June", the supplier said.

Market demand across East-coast India was mixed due to supply related issues and unavailability of barges.

"Last month, the volumes in Chennai and New Mangalore were comparatively lower, and there were no barges available at Tuticorin port. However, we did see an increase in bunker consumption at Vizag and continue to witness a rise in inquiries for July", said a Visakhapatnam-based trader.

"There have been a supply issues at Paradip via pipeline, but barge delivery remains unaffected", another trader said.

Sri Lanka

Monsoon related weather disruptions and consistent availability of product at competitive rates across Indian ports hit the June bunker sales volumes at Sri Lankan ports of Colombo and Hambantota.

The spread between Marine Fuel 0.5% Delivered Colombo and Marine Fuel 0.5% Delivered Kochi reached to its highest levels since January, peaking at $61/mt in June, S&P Global Commodity Insights data showed.

"When compared to Sri Lanka, Indian ports were offering relatively lower prices in June. Vessel owners and charterers were willing to wait at Indian ports for 8-10 hours even during bad weather conditions, benefiting from the price differential", an India-based trader said.

"We have seen a drop in demand due to the availability of product in India at competitive rates, almost $15-$20 cheaper than Colombo. Other than the price gap, we also lost a couple of inquires due to the bad weather conditions caused by the rough monsoon", a Sri Lanka-based trader said.

"Because of the adverse weather conditions, we could not do OPL deliveries, which prompted some of the owners to either take vessels to berth for supply or cancel it altogether. Some owners avoided taking bunkers in Sri Lanka altogether", the trader said.

Total ship-to-ship and bunkering operations at Sri Lankan ports fell 26% month-on-month to 173 in June, almost 30% down from its peak in March.

"The combined volumes in June for all bunker fuels (HSFO, VLSFO and MGO) would have been around 50,000 mt for Colombo and Hambantota. It is significantly lower than 70,000-75,000 mt levels that we touched in the first quarter", said another Colombo-based trader.

Weather conditions have improved over the past two weeks, which has supported demand. "Weekly demand has certainly increased. In just last four days we have seen 16,000 mt of inquiry volumes for LSFO only."

"In Colombo all existing bunker suppliers are very competitive. We have back-to-back shipments for July, and we are expecting the markets to be oversupplied soon. So, there is a possibility that everyone might rush to evacuate the cargoes, which could bring the prices down", a trader said July 5.