Singapore delivered/ex-wharf 380 CST bunker spread may stay narrow in near term: sources


The spread between delivered and ex-wharf 380 CST bunker fuel prices had narrowed in recent days and could persist into the near term, trade sources said this week.

The price difference stood at $4/mt by the close of Asian trade Monday, and had narrowed for the seventh consecutive trade session, with delivered 380 CST bunker fuel assessed at $461.50/mt and ex-wharf bunker fuel assessed at $457.50/mt, S&P Global Platts data showed.
Typically, a bunker fuel trader would have to sell delivered bunker fuel at a price of at least $5/mt above ex-wharf bunker fuel to achieve breakeven, according to trade sources.

Strong cargo differentials in the high sulfur fuel oil market have lent support to ex-wharf price premiums in recent days, while strong selling interest in the delivered bunker fuel market continued to cap price gains, sources said.

“Ex-wharf bunker is still supported by the cargo market, [which is seeing] low arbitrage, strong cash differentials and high replenishment costs,” a Singapore-based bunker supplier said.

These factors have in turn boosted ex-wharf bunker offers and led to stronger ex-wharf premiums over the Mean of Platts Singapore 380 CST HSFO assessments, sources said.

“The [delivered/ex-wharf] spread is way narrower these days, it used to be above $5/mt in the past but it’s now around or even less than $5/mt these days,” a Singapore-based bunker fuel trader said.

“There are [delivered] sellers who can offer at competitive prices,” the trader added.

The spread was seen at an average of $5.75/mt in first-half 2018, narrower from an average of $6.87/mt in H2 2017, Platts data showed.