Singapore\u2019s low-sulfur marine fuel arbitrage arrivals from the West to drop further in April<\/p>\n
Singapore\u2019s low sulfur fuel oil arrivals from the Western markets are set to decrease for a third straight month in April, partly weighed down by unviable arbitrage economics due to persistently high freight rates, while the ongoing war in the Middle East continues to block oil inflows from the region.<\/p>\n
Singapore, the world\u2019s largest bunkering hub, is now expected to receive around 1.4 million-1.5 million metric tons of LSFO from the West in April, down from about 1.8 million-1.9 million mt in March, multiple Singapore-based traders told Platts, part of S&P Global Energy. The March volume bore the first brunt of disruption after the US and Israel launched strikes on Iran on Feb. 28, which led Tehran to start blocking the Strait of Hormuz.<\/p>\n
\u201cApril [arbitrage arrivals] are going to be lower. May should be even lower,\u201d said a Singapore-based trader, adding that \u201ceven when the East-West spread is $100-plus\/mt, it looks like it\u2019s widely open. But when you think about the voyage time, and the backwardation, it\u2019s not workable.\u201d<\/p>\n
Another Singapore-based trader said, \u201cIndeed, we are seeing lower arrivals for April \u2026 Less arbitrage volumes from Europe and more diversion away from Singapore to other ports, including Mauritius and Mozambique, etc.\u201d The trader added, \u201cMay does also look like lower arrivals.\u201d<\/p>\n
There are medium sulfur components available in the Singapore market, partly buoyed by Brazilian supplies, but sulfur cutter availabilities are quite tight at present, according to several trade sources.<\/p>\n
The downstream bunker demand in Singapore has been weak in recent weeks, and that\u2019s weighing on the market, according to trade sources.<\/p>\n
\u201cSupplies are less. But it doesn\u2019t really matter because demand is so bad,\u201d said one trader, while another trader said, \u201cI think the market sentiment is turning bearish because of weak demand \u2026 Supplies are limited, but demand is quite weak.\u201d<\/p>\n
Platts assessed the spread between Singapore marine fuel 0.5%S cargo and FOB Rotterdam 0.5%S barge assessments, or the East-West spread, at $74\/mt on April 16, unchanged day over day.<\/p>\n
The spread, which hit a record high of $165\/mt on March 19, has since cooled off about 55%, according to Platts data that goes back to April 2022, but traders said persistent strength in dirty freight rates has kept the West-East arbitrage window largely shut in recent weeks.<\/p>\n
Platts assessed the Singapore marine fuel 0.5%S cargo\u2019s differential over the Mean of Platts Singapore marine fuel 0.5%S assessment at a premium of $21.08\/mt at the Asian close April 16, down from $22.90\/mt on April 15.<\/p>\n
Meanwhile, within the European VLSFO market, participants observed an open arbitrage window at the beginning of April, but declining premiums in Asia continue to weigh on this arbitrage opportunity.<\/p>\n
\u201cThere were some loadings on VLSFO arbs \u2026 there are three cargoes for May arrivals in Singapore,\u201d a Europe-based trade source said.<\/p>\n
While dirty tanker freight rates have fallen from their highs, so too have premiums in Singapore, challenging the arbitrage window from Europe.<\/p>\n
Fundamentals in Europe remain stable despite ongoing supply concerns centered around the Middle East conflict.<\/p>\n
\u201cThere is lots of availability in the market, there are enough offers,\u201d said an additional trader source.<\/p>\n
Platts last assessed the front-month FOB Rotterdam VLSFO barge crack at 78 cents\/b, April 15, down from a peak of $5.08\/b, March 6.<\/p>\n
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