South Korea bunker fuel suppliers to start 0.1% fuel oil supply mid-Nov: sources

South Korea bunker fuel suppliers are set to start supplying 0.1% sulfur fuel oil to the market, with SK Energy likely to start selling the low sulfur grade in mid-November, followed by other refiners S-Oil, Hyundai Oilbank and GS Caltex in December, trade sources said Thursday.

This is ahead of the tightening of sulfur specifications in the Emissions Control Areas in Europe and North America to a maximum of 0.1% from the current cap of 1% from January 1, 2015 as per International Maritime Organization regulations.

Market sources estimate that South Korean refiners will produce 20,000- 30,000 mt of 0.1% LFSO, roughly in line with expected demand.

Across other North Asian ports, refiners have no plans to supply 0.1% sulfur LSFO at the moment.

A supplier in Hong Kong said the company may start to supply “depending on the demand for the product,” while in Shanghai only Sinopec was said to be able to supply 0.1% LSFO now. Japaneses producers said that it is “too expensive” to produce in Japan.

“Many suppliers are thinking to supply 0.1% sulfur LSFO by blending 0.3% sulfur fuel oil with 10 ppm sulfur gasoil, and basically 0.3% sulfur fuel oil is not produced in Japan and [typically] imported from South Korea, and gasoil prices are higher than other Asian countries,” a trader added.
Source: Platts