Asia Fuel Oil-Premiums little changed on relatively balanced market

Premiums on both the 180-cst and 380-cst fuel oil grades were range-bound on Monday, as thin demand offset lower supplies of the heavy distillate in the region, sources said.

The 180-cst fuel oil was up slightly by 19 cents a tonne to $1.50 a tonne to Singapore spot
quotes, supported by spot demand from local trader Hin Leong.

The cash premium on 380-cst declined marginally by just 2 cents a tonne to $1.25 a tonne to Singapore spot quotes, Reuters data showed.

“Supply is a bit tighter than last month so the crack is supported, but the demand,
especially in the marine fuel segment, is slow,” said a North Asia-based source on Monday.

“With the high flat prices lately, many end-users in China and Singapore seem to take a
wait-and-see, cautious approach.”

Singapore is the world’s largest bunkering hub, with monthly sales averaging more than 3
million tonnes. China is also one of the key Asian ports for refuelling with total sales of
around 700,000 tonnes a month, traders said.

Rising costs to charter very large crude carriers (VLCC) to ship fuel oil from the West,
including the United States and Northwest Europe, are curbing flows.

A Singapore-based shipping source said robust activity out of the Middle East has helped
firm sentiment for the shipping market in the West, which has seen rates rise by up to $300,000 for a VLCC — or about $1.10 a tonne — in just a week.

In other market news, state-owned Bangladesh Petroleum Corp has concluded its second-half 2014 term negotiations for fuel oil at $34 a tonne to Singapore spot quotes, down from $35 a tonne for current term cargoes and from $39.50 a tonne a year earlier, a senior BPC official said on Sunday.

*CASH TRADE

BP sold to Hin Leong 20,000 tonnes of 180-cst for July 26-30 at a premium of $1 a tonne to average July Singapore spot quotes.

*TENDER NEWS

South Korea’s Western Power Co Ltd is seeking 45,000 tonnes of high sulphur fuel oil for July 25-29 arrival into Pyeongtaek via a tender that will close on July 7, the utility said on its website.

*MARKET NEWS

TonenGeneral, Japan’s second-biggest oil refiner by capacity, said its 268,000-barrels-per-day (bpd) Kawasaki refinery near Tokyo has resumed operations since last Tuesday following scheduled maintenance.

Japan may cut crude refining capacity by as much as 10 percent, or 400,000 barrels per day (bpd), by 2018 under a second round of reductions to be forced on the country’s refiners amid forecasts for a continuing decline in oil product demand.
Source: Reuters (Reporting by Jane Xie; Editing by Prateek Chatterjee)