Japan, S Korea bunker fuel premiums fall $10-15/mt on ample supply

Premiums for 380 CST bunker fuel in Japan and South Korea over Singapore have fallen $10-15/mt this week on ample supply and weak demand, Platts data showed.
Japan's 380 CST bunker premium over Singapore fell to $24.13/mt Thursday, down 30% from $34.29/mt last Friday. Thursday's premium was the lowest since December 18.
Japan 380 CST grade was assessed at $630.50/mt Thursday, up $1/mt from last Friday.
South Korea's 380 CST bunker premium over Singapore was $12.13/mt Thursday, down 54% from $26.29/mt last Friday. The grade was assessed at $618.50/mt Thursday, down $3/mt from last Friday.
Benchmark Singapore 380 CST delivered bunker fuel rose $10.50/mt from last Friday to $611/mt Thursday.
In Japan and South Korea, demand has not kept up with rising supplies, industry sources said.
Japan's supply has increased since mid-June, when refineries restarted operations after turnarounds.
TonenGeneral resumed normal output at its 156,000 b/d Sakai crude distillation unit in western Japan on June 20 after a monthlong turnaround. It ships about 20,000-30,000 mt/month of bunker fuel.
Fuji Oil restarted its 143,000 b/d Sodegaura CDU in Tokyo Bay on June 16 after a turnaround that started May 13. It supplies about 10,000 mt/month of bunker fuel.
However, Japanese demand remains weak, especially from spot customers, sources said. Demand from term customers has remained steady, traders based in Tokyo said.
"Sales in this month are lower than June so far," said a Tokyo-based bunker trader.
Japanese trade sources buy bunker fuel from local refiners at monthly average prices of Japanese bunker published by Platts. The average price for July is estimated at around $630/mt. However, trade prices for fuel delivered to Tokyo Bay were $623.50-627/mt Thursday, meaning traders were selling spot bunker fuel at lower prices than their costs to get orders.
In South Korea, refiners keep competing with each other for orders.
Since refiners like Hyundai Oilbank receive imported cargoes, they have to prepare some space for fresh cargoes, said an industry source.
"Demand is not that good," said a Seoul-based bunker trader Friday, pointing to refiners' high inventories.
"They are thinking crude prices will go down soon," he said, adding that refiners want to sell their fuel before crude falls.
"All local refiners are keen to sell," another trader said Friday. "They are desperate to get orders,"
In Singapore, bunker fuel prices have been fluctuating in tandem with crude prices, with some exceptions when demand has been especially low and sellers have had to cut prices to move volumes.
The May average of the Singapore delivered 380 CST grade was $609.79/mt, while the June average was $604.30/mt, according to Platts data. The average for July to date is $599.55/mt.
Singapore has had ample bunker fuel supply, sources said. In June, it was around 4-4.3 million mt, traders at the time. They expect Singapore supply to rise to 5-6 million mt, about half of which would be end-user grade fuel for the bunker market.
Singapore has seen weak demand in the past three months, despite falling prices.
According to official data from the Maritime and Port Authority of Singapore, monthly volumes sold in the port have been on a downtrend since April's 3.65 million mt. They fell to 3.53 million mt in May and 3.48 million mt in June.
Source: Platts