Asia Fuel Oil-380-cst bunker premium jumps to two-week high

Ex-wharf 380-cst marine fuel oil premium to cargo prices jumped to a two-week high as buyers feared supply would be squeezed among a few hands in early August, traders said.

The 380-cst premium stood at $4.99 a tonne to cargo prices, up $1.58 a tonne from Monday, Reuters data showed.

Ex-wharf is a common industry term referring to fuel loaded directly from oil terminals, as
opposed to fuel oil that is delivered to vessels via barges.

Demand appears to have picked up alongside lower crude and fuel oil prices, traders said.

“Some people are afraid that fuel costs will shoot up in August, on the back of talk that
oil will be in the hands of a few traders,” a Singapore-based trader said.

In South Asia, state-owned Bangladesh Petroleum Corp (BPC) plans to import 20 percent more fuel oil in the second half of this year compared with the first half to feed demand for power generation, a senior official from the company said on Tuesday.

BPC will import about 420,000 tonnes of 180-cst high sulphur fuel oil (HSFO) in the second half, compared with 350,000 tonnes in the first half, he said.

BPC’s import is covered by term contract as it does not enter the spot market. The premium
for fuel oil for the second half of 2014 will be $34 a tonne to Singapore spot quotes, down from $35 a tonne for first-half term cargoes and from $39.50 a tonne a year earlier.

In other market news, refineries in South Korea are gearing up to trim output in August on
persistently weak margins and as some units are shut for maintenance, sources with direct
knowledge of the matter said earlier this week.

The country’s top two refiners, SK Energy and GS Caltex, will operate at 70-87 percent of
their capacities in August, down by about five percentage points from July, sources said.

S-Oil will operate at about 95 percent while Hyundai Oilbank may reduce its refining rate in August to about 85 percent.

South Korea has the fourth-largest refining capacity in Asia Pacific at 2.887 million
barrels per day, according to BP Statistical Review 2014.

In tender news, Indian Oil Corp is offering 15,000 tonnes of 380-cst fuel for loading over August 16-18 from Haldia. The tender will close on July 24, with validity until the next day.
Source: Reuters (Reporting by Jane Xie; Editing by Anupama Dwivedi)