LSFO Rdam barges at deepest discount to front-month swap in 6 months; weak bunker demand

Fuel oil 1% FOB Rotterdam barges Monday hit their deepest physical discount for six months due to weak bunker demand, traders said.

The discount was assessed at $4.50/mt, the deepest discount since December 27, 2013, when it stood at $6.00/mt, Platts data shows.

Traders said this was due to ample supply in the Amsterdam-Rotterdam-Antwerp market, as bunker demand for low sulfur fuel oil has fallen ahead of new regulations requiring cleaner 0.1% shipping fuel burn within the Emission Control Area starting from January 1, 2015.

While demand for LSFO barges has been gradually weakening recently, bunker players reported extremely low June volumes requested on a spot basis.

“LSFO market will disappear in six months time,” one trader said, adding that buying interest has been already down for bunker contracts.

“There is a lot of product around, that’s how I see it,” another fuel oil trader said, adding that prompt dates were well supplied.
Source: Platts