Shippers and trading firms are facing longer waits and higher prices for low-sulphur fuel deliveries at Singapore, the world's top bunker hub, as refuelling demand rises due to ship diversions from Red Sea tensions, industry sources told Reuters.
Ships are topping up more at hubs such as Singapore where fuel is more competitively priced compared to farther-flung ports, after a growing number of vessels reroute around Africa to avoid potential attacks.
As a result, availability of slots for bunker barges, which supply marine fuel to ships, has tightened for the most actively traded very low sulphur fuel oil (VLSFO) grade.
The crunch is also exacerbated by some operators previously converting their low-sulphur barges to high-sulphur barges, bunkering sources said. Refuelling demand for high sulphur fuel oil has recovered in recent years after more scrubber-installed vessels came online.
The wait for the earliest available slots for booking VLSFO barges has roughly doubled to about two weeks, compared to the typical average of one week, sources said.
Singapore bunker premiums for VLSFO have trended higher to more than $30 a metric ton over cargo quotes for prompt delivery dates, climbing from $25 to $30 in mid-January and about $20 in early January. The earlier the delivery, the higher the premium.
While there were still limited slots available for nearer-term dates, such deliveries can command premiums of close to $50 per ton, sources said.
“Should tensions in the Red Sea continue, tightness in Singapore's bunker market will persist due to increased demand from longer voyage times,” said Ivan Mathews, consultancy FGE's head of Asia refining and global fuel oil service.
The longer waiting times for available barges and higher delivered premiums could cap upside to Singapore bunker demand from December levels, said Mathews, as ships may choose to refuel at other Asian ports.
Meanwhile, the price spread of delivered bunker fuel above ex-wharf bunker fuel has also widened sharply this month, from about $10 in early January to about $20 a ton in late January, according to cargo and bunker traders.
Delivered bunker fuel is usually sold above ex-wharf bunker prices and typically includes a barging fee of at least $5 a ton, so a wider spread between delivered and ex-wharf prices is an indicator of higher barge margins.
Ship diversions have altered refuelling patterns and boosted demand for bunker fuel at ports from Mauritius and SA to the Canary Islands, while demand at established hubs such as Singapore and Rotterdam is poised for further uptick, industry sources say.
Monthly bunker sales at Singapore breached 5 million tonnes in December, surpassing the usual 4 to 4.5 million tonnes a month, data from Singapore's Maritime and Port Authority showed.
Reuters
Singapore bunker fuel schedules tighten, premiums rise on Red Sea impact
Image: REUTERS/Feline Lim/File Photo
Shippers and trading firms are facing longer waits and higher prices for low-sulphur fuel deliveries at Singapore, the world's top bunker hub, as refuelling demand rises due to ship diversions from Red Sea tensions, industry sources told Reuters.
Ships are topping up more at hubs such as Singapore where fuel is more competitively priced compared to farther-flung ports, after a growing number of vessels reroute around Africa to avoid potential attacks.
As a result, availability of slots for bunker barges, which supply marine fuel to ships, has tightened for the most actively traded very low sulphur fuel oil (VLSFO) grade.
The crunch is also exacerbated by some operators previously converting their low-sulphur barges to high-sulphur barges, bunkering sources said. Refuelling demand for high sulphur fuel oil has recovered in recent years after more scrubber-installed vessels came online.
The wait for the earliest available slots for booking VLSFO barges has roughly doubled to about two weeks, compared to the typical average of one week, sources said.
Singapore bunker premiums for VLSFO have trended higher to more than $30 a metric ton over cargo quotes for prompt delivery dates, climbing from $25 to $30 in mid-January and about $20 in early January. The earlier the delivery, the higher the premium.
While there were still limited slots available for nearer-term dates, such deliveries can command premiums of close to $50 per ton, sources said.
“Should tensions in the Red Sea continue, tightness in Singapore's bunker market will persist due to increased demand from longer voyage times,” said Ivan Mathews, consultancy FGE's head of Asia refining and global fuel oil service.
The longer waiting times for available barges and higher delivered premiums could cap upside to Singapore bunker demand from December levels, said Mathews, as ships may choose to refuel at other Asian ports.
Meanwhile, the price spread of delivered bunker fuel above ex-wharf bunker fuel has also widened sharply this month, from about $10 in early January to about $20 a ton in late January, according to cargo and bunker traders.
Delivered bunker fuel is usually sold above ex-wharf bunker prices and typically includes a barging fee of at least $5 a ton, so a wider spread between delivered and ex-wharf prices is an indicator of higher barge margins.
Ship diversions have altered refuelling patterns and boosted demand for bunker fuel at ports from Mauritius and SA to the Canary Islands, while demand at established hubs such as Singapore and Rotterdam is poised for further uptick, industry sources say.
Monthly bunker sales at Singapore breached 5 million tonnes in December, surpassing the usual 4 to 4.5 million tonnes a month, data from Singapore's Maritime and Port Authority showed.
Reuters
READ MORE :
US military strikes two Houthi anti-ship missiles in Yemen
Red Sea crisis pressures China’s exporters as shipping delays, costs mount
US lists Houthis as terrorists, rebels hit another US-operated ship
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
News and promos in your inbox
subscribeMost read
Latest Videos