Asia Fuel Oil-180-cst discount down at near three-month low

Cash discount on the 180-cst fuel oil deepened for the fifth consecutive session to a near three-month low on Monday, pulled down by aggressive selling during cash trading, traders said.

The 180-cst discount stood at $3.21 a tonne to Singapore spot quotes, down 21 cents a tonne from Friday, Reuters data showed.

The lowest standing offer at the close of cash trading was around minus $3 a tonne to
Singapore quotes for prompt cargoes.

Deals were concluded in discounts in the range $2.99-$3.28 a tonne to Singapore quotes for
cargoes loading further out, Reuters calculations showed.

“If you look at the price difference between 180-cst August/September swaps, it is in a
backwardation of about $1.75 a tonne. There are people willing to sell 180-cst at big discounts, which is not reflective of where the market is,” said a Singapore-based trader.

The August/September price difference, also known as the timespread, stood at $1.75 a tonne on Monday, Reuters data showed.

The timespread is usually used as a gauge on storage costs, which may be recovered in cargo premiums, traders said.

In other news, China’s imports of fuel oil rebounded in June, rising more than 20 percent to
a two-month high of 1.38 million tonnes, official customs figures showed on Monday.

In South Korea, Swiss trading house Vitol will supply South Korean refiner Hyundai Oilbank around 65,000 tonnes of straight run fuel oil for six months starting from July, traders said on Monday.

South Korea’s East-West Power is seeking 50,000 tonnes of high sulphur fuel oil for August 16-20 arrival into Ulsan via a spot tender that will close on July 28.

South Korea-based traders said they are expecting demand for high sulphur fuel oil used in
power stations to increase for August and September as compared with this month.

“Demand looks to be going up in August and September, perhaps more than 100,000 tonnes each month. This is more than in July but still very low levels compared to last year,” said a South Korea-based trader.

*SINGAPORE CASH DEALS: Two 180-cst trades.

BP bought from Mercuria 20,000 tonnes for Aug. 15-19 at a discount of $1 a tonne to
Singapore spot quotes over balance July.

Glencore sold to KIB Energy 20,000 tonnes for Aug. 16-20 at a discount of $2.50 a tonne to Singapore spot quotes over balance July.
Source: Reuters (Reporting by Jane Xie; Editing by Prateek Chatterjee)