S Korean demand for new 500 CST bunker fuel totals 30,000 mt in May: sources

South Korea's demand for the new 500 CST bunker fuel grade totaled around 30,000 mt for May loading, following first sales by SK Energy in April and GS Caltex in May, industry sources said Tuesday.
SK Energy, which was the first to supply 500 CST in the country, carried out its first delivery of the grade on April 2, Platts reported previously. GS Caltex, which started selling 500 CST bunker fuel from May 8, was the second supplier in the country. Other refiners, S-Oil and Hyundai Oilbank, currently do not supply the grade.
SK Energy sold about 20,000 mt for May loading, market sources said. GS Caltex sold 10,000 mt for May, a company source said.
GS Caltex in mid-June will convert a 380 CST tank at its 775,000 b/d Yeosu refinery in the south, to contain 500 CST, the source said. The capacity of the tank was not disclosed by the company source, but a trade source said the tank will likely be able to contain 20,000-30,000 mt of 500 CST bunker fuel.
South Korea typically sells 380 CST and 180 CST grades, as well as marine gasoil for bunkering. SK Energy and GS Caltex, however, decided to offer the new grade on expectations that they will see increasing demand for this product because of its lower price, industry sources said.
The 500 CST grade is typically cheaper than 380 CST because of the higher viscosity, however, only newbuild container vessels can consume the grade. The 500 CST price is about $10/mt lower than that of 380 CST in South Korea, sources said.
These vessels would normally take a larger volume of 500 CST bunker fuel, 2,000-3,000 mt at one time, compared with 300-1,000 mt of 380 CST loaded by the other vessels, sources added.
Even though the refiners have started supplying a new product, total bunker demand in South Korea has been stable this month, which means 500 CST demand replaced 380 CST, a trade source noted.
Hong Kong 500 CST bunker fuel is about $7/mt lower than the 380 CST grade, but Hong Kong 380 CST prices are typically $10-20/mt lower than South Korea, said a Hong Kong-based supplier.
Source: Platts