Tight supply of marine gasoil (MGO) at the South African port of Durban has driven prices higher and forced some bunker fuel buyers to opt for road diesel instead.
Only one bunker fuel supplier at the port has had any prompt MGO availability in recent weeks, according to traders. This is reflected in the price of MGO dob Durban rising to a range of $1,250-1,300/t in November and December from around $1,000/t at the end of October. For comparison, Argus-assessed MGO values dob Cape Town averaged just $966.50/t between 9-13 December.
The tight MGP supply at Durban is being mirrored at the South African port of Richards Bay, lending further support to prices, according to one trader. Road diesel is being offered as an alternative as it can be compatible with ship engines. It has sulphur content of 0.005pc, while MGO has up to 0.1pc. The two fuels go through similar processing.
Some independent local suppliers can supply road diesel to Durban and Richards Bay by truck, market participants said.
Durban is a major bunkering location in South Africa, with demand mainly coming from dry bulk carriers and container vessels. Bunker fuel demand at the port has been supported this year by vessels going via the Cape of Good Hope on the east-west route to avoid chronic traffic disruption in the Red Sea. The tight supply comes despite MGO imports into Durban, including expected arrivals, almost doubling to 64,000t this year, according to Vortexa data.
It is not the first time that MGO availability has dried up at Durban. Supply tightened in 2019 when BP and Shell's 180,000 b/d Sapref refinery in Durban shut for maintenance.
The State-owned Central Energy Fund (CEF) struck a deal earlier this year to acquire Sapref from BP and Shell. The South African government plans to repair the refinery and expand its capacity to at least 600,000 b/d.
