S&B ANALYSIS: Supply Crunch Sends Singapore VLSFO Premium to Rotterdam to Record High & More News Here

A provide crunch has raised Singapore’s VLSFO value considerably this week, leaving its premium over Rotterdam on the highest stage on file.

VLSFO delivered in Singapore jumped by $56/mt to $1,010.50/mt on Wednesday, in accordance to Ship & Bunker costs. The value improve on the world’s largest bunkering hub has considerably outpaced that of different ports.

Singapore’s VLSFO premium to Rotterdam stood at $165/mt on Wednesday, in contrast to a year-to-date common of $36.50/mt and a 2021 common of $27.50/mt. The unfold was at a file excessive, beating the earlier file of $150.50/mt seen on January 7, 2020 throughout the IMO 2020 transition.

Singapore’s VLSFO value got here down to $992/mt on Thursday, narrowing the premium to Rotterdam to $142.50/mt.

Singapore’s VLSFO premium to Fujairah on Wednesday was $49/mt, in contrast to a year-to-date common of -$9.50/mt and a 2021 common of -$1/mt. Wednesday’s premium to Houston was $114.50/mt, in contrast with a year-to-date common of $15.50/mt and a 2021 common of $20/mt.

The VLSFO leap in Singapore has additionally considerably widened its VLSFO-HSFO premium — a key measure of how a lot scrubber-equipped ships can save of their bunker prices. The premium stood at $347/mt on Wednesday, in contrast with a median this yr of $192/mt and a 2021 common of $117.50/mt.

An area bunker market supply highlighted tightening provides as a possible explanation for the leap in costs. Paul Hardy, head of enterprise improvement at brokerage NSI, cited comparable causes.

“I believe it to be the lag between when Russian product exited the market in NWE and the knock-on effect for arbitrages cargoes c. 1 month later,” Hardy informed Ship & Bunker by e-mail.

“This has been exacerbated by the backwardation in VLSFO making quite a lot of different trades marginal at greatest.

“This is seen within the ahead curve presently with strengthening backwardation for entrance months in Singapore for VLSFO.

“Interestingly the HSFO curve is much flatter pointing towards more balance of supply and demand.”

Singapore is dealing with shortfalls in bunker provide as the identical time as demand appears to be like set to climb in response to the Shanghai lockdown easing.

Low-sulfur residual inflows to Singapore from the West of Suez area are set to complete simply 1.5-1.8 million mt in May, Argus Media reported earlier this week, down from final yr’s common of 2.5 million mt/month.

The diminished provides are down to tightening markets within the face of the gradual phase-out of Russian oil from world markets. Russia’s gasoline oil exports come to Singapore steadily from the Baltic and Black Sea, passing by a number of European and Middle Eastern markets on the way in which, which means throughout tight market situations the provides are a lot diminished by the point they attain Asia-Pacific.

The file Singapore-Rotterdam unfold has come shortly after one other stunning transfer within the value relationship between the 2 ports, the temporary emergence of a Singapore low cost to Rotterdam in early April.

Singapore’s VLSFO value got here down a lot nearer to Rotterdam’s within the instant aftermath of the Russian invasion of Ukraine, shifting to a median premium of $8.50/mt in March from considered one of $47.50/mt throughout January and February.

It then moved to a reduction for 11 consecutive days from March 25 to April 8, with Singapore’s low cost to Rotterdam peaking at $45/mt on April 4.

This roughly coincided with knowledge exhibiting Rotterdam’s bunker gross sales jumped to a seven-year excessive within the first quarter, whereas Singapore’s dropped to a seven-year low.

But with Shanghai’s lockdown now ending, which can do a lot to ease congestion worldwide as port throughput will increase throughout Asia-Pacifc, Singapore’s bunker demand could also be about to surge simply as provides contract.

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