LSFO strong bidding continues on Japan earthquake

Market: Oil products
14/03/11

London, 14 March (Argus) — Damage to Japan's nuclear energy infrastructure caused by an earthquake and subsequent tsunami on 11 March has led to strong bidding on low-sulphur fuel oil swaps today. Traders are buying the swaps in anticipation of increased utility demand for low-sulphur fuel oil in power generation to make up the shortfall from damaged nuclear facilities.

Low-sulphur fuel oil cargo premiums to high-sulphur 3.5pc barges rose to $76/t this afternoon from $59-60 on 11 March.

Traders are still assessing the market impact of the earthquake, but they expect the premium of northwest European low-sulphur fuel oil cargoes to Rotterdam high-sulphur fuel oil barges — the high-low spread — to widen further.

The April swap high-low spread rose by about $15/t on 11 March following news of the earthquake and tsunami. Trading company Vitol lodged two bids late on 11 March for physical low-sulphur fuel oil cargoes at $64/t and $60/t premiums to fob Rotterdam high-sulphur fuel oil barge quotes.

There is a precedent for current events on the low-sulphur fuel oil market. As brokers PVM point out in a note to traders today, an earthquake measuring 6.6 on the Richter scale struck off the coast of Japan near Chuetsu on 16 July 2007. Three operating reactors of the Kashiwazaki-Kariwa nuclear power complex were shut down. Although the damage was much less severe than this time, it was almost two years before the first unit was brought back on line.

After the 2007 earthquake, a study by Japan's insititute of energy economics found that the substitution of fuel oil for power consumption did not create a spike in prices beyond normal market movements.

Then, as now, fuel oil swaps moved strongly into backwardation as prompt low-sulphur swap purchases rose. However, prices have already been pushed up by the crisis in Libya, as low-sulphur crude supplies have been reduced. Tight fuel oil supplies in the Mediterranean have also sustained high low-sulphur prices.

Send comments to feedback@argusmedia.com
jb/jk 2.4

If you would like to review other ArgusMedia.com content options, request more information about Argus' energy news, data and analysis services.

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

12/05/25

Naphtha no longer competitive feedstock: Braskem

Sao Paulo, 12 May (Argus) — Brazil-based petrochemical producer Braskem is pursuing a strategic shift in polymers production by favoring natural gas liquid (NGL) feedstocks and moving away from naphtha. Naphtha is no longer a competitive feedstock in the petrochemical sector, driving the need for greater flexibility in raw material sourcing, chief executive Roberto Ramos said Monday on the company's first-quarter earnings call. The transition to lighter feedstocks is part of a broader initiative to enhance efficiency, reduce costs, and improve competitiveness amid evolving global petrochemical dynamics, Ramos said. The company's plan focuses on increasing the use of ethane and propane as primary feedstocks in Mexico and Brazil. In Mexico, Braskem has inaugurated an ethane import terminal, which will provide a stable supply to its operations. The facility has the capacity to store 80,000 b/d of ethane, while the polyethylene (PE) plant processes 66,000 b/d. This surplus storage has prompted considerations for a new PE unit in Mexico to maximize the available feedstock. In Brazil, Braskem aims to reduce reliance on naphtha-based PE production by integrating more natural gas-derived inputs. The company is evaluating projects to utilize feedstocks sourced from shale gas extracted in Argentina's Vaca Muerta formation. The petrochemical complex in Rio Grande do Sul, which operates with a mixture of naphtha and natural gas, is among the facilities targeted for increased gas utilization. Braskem's Rio de Janeiro facility is also undergoing expansion of its gas-based assets, adding two new furnaces that crack ethane and propane to increase capacity to 700,000 t/yr. This increased production is anticipated to lower unit production costs and improve profitability. The move to gas-based production is expected to optimize operations and align Braskem's facilities with cost-effective supply chains, Ramos said. The shift comes as global trade dynamics continue to influence raw material availability. While US-China trade agreements have temporarily eased tariff pressures, Braskem is trying to position itself to navigate long-term supply chain uncertainties by diversifying its production inputs. Ramos has also indicated potential investments in ethanol dehydration technology, which would allow select facilities to convert ethanol into ethylene, further supporting PE production with an alternative renewable feedstock. Production and sales Braskem said its first-quarter domestic resin sales fell by 4pc from the same period in 2024, but sales were little changed from the prior quarter. Domestic resin sales totalled 807,000 metric tonnes (t) in the first quarter, down from 839,000t a year earlier. Resin sales volumes remained in line with the fourth quarter last year, but the company highlighted a quarter-on-quarter increase in PE and polypropylene (PP) sales volumes of 2pc and 3pc, respectively, offset by a 16pc reduction in PVC sales. In Mexico, Braskem Idesa's PE sales fell by 11pc from the same period in 2024 and by 5pc quarter-on-quarter, as the company is looking to manage inventory ahead of a planned maintenance shutdown in the second quarter. The plant utilization rate reached 79pc, rising from the fourth quarter on higher ethane availability through the Fast Track solution. But utilization fell by four percentage points year-on-year, mainly due to reduced supply of ethane from Mexico's Pemex. Braskem posted a first-quarter profit of $114mn, rebounding from a loss of $273mn a year earlier and a loss of $967mn in the fourth quarter last year. By Fred Fernandes Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Find out more

News

EU, UK diesel imports from Mideast, India fall in April

12/05/25

News

12/05/25

EU, UK diesel imports from Mideast, India fall in April

London, 12 May (Argus) — Arrivals of diesel and other gasoil in the EU and UK edged lower in April, with high imports from Saudi Arabia's port of Yanbu not fully making up for lower supply from the Mideast Gulf and India. Data from Vortexa show total arrivals at 4.3mn t, lower by 3pc from March on a daily average basis and by 7pc on the year. The Mideast Gulf is the region that has supplied the most to the EU and UK so far this year, stepping up to fill a gap created by weak US arrivals. But market participants said the arbitrage from the Mideast Gulf was shut for most of April. Arrivals from the Mideast Gulf were around 1mn t, dropping by 24pc on a daily average basis from March but only marginally falling from April 2024. Exports from the region probably fell because of maintenance at the 400,000 b/d Rabigh refinery. Geopolitical tensions may have harmed transit through the Bab el-Mandeb strait. The EU and UK imported the largest amount from Saudi Arabia, at 1.3mn t or around 29pc of total arrivals. Around 68pc of Saudi Arabian arrivals, or about 780,000t, came from the Red Sea port of Yanbu, the largest amount from there since December 2020. Yanbu is just south of the Suez Canal, and market participants often treat it similarly to a Mediterranean port when calculating arbitrage economics. Arrivals from India dropped sharply in April, again probably driven by poor arbitrage economics. Arrivals fell by 45pc on the month on a daily average basis and by 33pc on the year, to 455,000t. Only five tankers arrived in the EU and UK from India, compared with 13 in April 2024. Reliance's 1.36mn b/d Jamnagar refinery conducted maintenance on a crude unit in April, and domestic demand reached an all-time high. Imports from the US, the EU's and UK's largest supplier in 2024, remained muted. Arrivals rose by 17pc on the month on a daily average basis to 562,000t, but were still only half the amount of April last year. Spain was the largest EU/UK importer, with 745,000t, the highest since May 2024. Imports may have risen because of maintenance at Repsol's 135,000 b/d Puertollano and 180,000 b/d Tarragona refineries . German arrivals were 493,000t, the highest since January 2023, up by 13pc on the year and more than double levels of March. Shell began to close its 147,000 b/d Wesseling refinery in March, and a turnaround took place at the Bayernoil consortium's 215,000 b/d Vohburg-Neustadt refinery. Demand stepped up, with households taking advantage of lower prices to stockpile product. By Josh Michalowski Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

India, Pakistan reach US-mediated, fragile ceasefire

11/05/25

News

11/05/25

India, Pakistan reach US-mediated, fragile ceasefire

Dubai, 11 May (Argus) — A US-mediated ceasefire reached on Saturday between nuclear-armed neighbours India and Pakistan is still holding, following four days of intense fighting. "After a long night of talks mediated by the United States, I am pleased to announce that India and Pakistan have agreed to a FULL AND IMMEDIATE CEASEFIRE," US president Donald Trump posted on his social media platform Truth Social on Saturday. India and Pakistan will now start negotiations on a broad set of issues at a neutral site, US secretary of state Marco Rubio said on social media platform X. India's military on 7 May launched attacks against targets in Pakistan and Pakistan-administered Kashmir in retaliation for an April terrorist attack that killed dozens. But by Saturday, the two countries seemed to be edging toward all-out war, as their militaries targeted each other's bases. India's foreign minister Subrahmanyam Jaishankar confirmed the ceasefire, saying on X that "India has consistently maintained a firm and uncompromising stance against terrorism in all its forms and manifestations. It will continue to do so." Pakistan "responded positively to the ceasefire proposal for regional and global peace, and its people and I hope that dialogue will now be chosen for resolution of water and Kashmir disputes," Pakistan's prime minister Shehbaz Sharif said in a televised address. Trump also praised leaders of both countries for agreeing to halt the aggression and said he would "substantially" increase trade with them, although this was "not even discussed". Kashmir is a contested area between India and Pakistan, and the two have twice gone to a war over the region. Fear of the conflict spreading roiled global financial markets. India is the region's second-biggest oil buyer after China — importing around 4.5mn b/d last year — and a major customer for other commodities, including LNG and coal. Pakistan also imports fertilizers, coal, oil products and LNG. The escalation between the two severely limited direct trade between them. Airlines in the region as well as some Mideast Gulf carriers rerouted or cancelled flights to avoid Pakistani airspace. But the Pakistan Airports Authority said on Saturday that "Pakistan's airspace has been fully reopened for all types of flights." By Bachar Halabi Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

White House ends use of carbon cost

09/05/25

News

09/05/25

White House ends use of carbon cost

Washington, 9 May (Argus) — The US is ending its use of a metric for estimating the economic damages from greenhouse gas (GHG) emissions, the latest reversal of climate change policies supported by President Donald Trump's predecessors. The White House Office of Management and Budget (OMB) this week directed federal agencies to stop using the social cost of carbon as part of any regulatory or decision-making practices, except in cases where it is required by law, citing the need "remove any barriers put in place by previous administrations" that restrict the ability of the US to get the most benefit "from our abundant natural resources". "Under this guidance, the circumstances where agencies will need to engage in monetized greenhouse gas emission analysis will be few to none," OMB said in a 5 May memo to federal agencies. In cases where such an analysis is required by law, agencies should limit their work "to the minimum consideration required" and address only the domestic effects, unless required by law. OMB said these steps are needed to ensure sound regulatory decisions and avoid misleading the public because the uncertainties of such analyses "are too great". The budget office issued the guidance in response to an executive order Trump issued on his first day in office, which also disbanded an interagency working group on the social cost of carbon and called for faster permitting for domestic oil and gas production and the termination of various orders issued by former president Joe Biden related to combating climate change. The metric, first established by the administration of former US president Barack Obama, has been subject to a tug of war between Democrats and Republicans. Trump, in his first term, slashed the value of the social cost of carbon, a move Biden later reversed . Biden then directed agencies to fold the metric into their procurement processes and environmental reviews. The US began relying on the cost estimate in 2010, offering a way to estimate the full costs and benefits of climate-related regulations. The Biden administration estimated the global cost of emitting CO2 at $120-$340/metric tonne and included it in rules related to cars, trucks, residential appliances, ozone standards, methane emission rules, refineries and federal oil and gas leases. By Michael Ball Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Brazil's inflation accelerates to 5.53pc in April

09/05/25

News

09/05/25

Brazil's inflation accelerates to 5.53pc in April

Sao Paulo, 9 May (Argus) — Brazil's annualized inflation rate rose to 5.53pc in April, accelerating for a third month despite six central bank rate hikes since September aimed at cooling the economy. The country's annualized inflation accelerated from 5.48pc in March and 5.06pc in February, according to government statistics agency IBGE. Food and beverages rose by an annual 7.81pc, up from 7.68pc in March. Ground coffee increased at an annual 80.2pc, accelerating from 77.78pc in the month prior. Still, soybean oil prices decelerated to 22.83pc in April from 24.36pc in March. Domestic power consumption costs rose to 0.71pc from 0.33pc a month earlier. Transportation costs decelerated to 5.49pc from 6.05pc in March. Gasoline prices slowed to a 8.86pc gain from 10.89pc a month earlier. The increase in ethanol and diesel prices decelerated as well to 13.9pc and 6.42pc in April from 20.08pc and 8.13pc in March, respectively. The hike in compressed natural gas prices (CNG) fell to 3.5pc from 3.92pc a month prior. Inflation posted the seventh consecutive monthly increase above the central bank's goal of 3pc, with tolerance of 1.5 percentage point above or below. Brazil's central bank increased its target interest rate for the sixth time in a row to 14.75pc on 7 May. The bank has been trying to counter soaring inflation as it has recently changed the way it tracks its goal. Monthly cooldown But Brazil's monthly inflation decelerated to 0.43pc in April from a 0.56pc gain in March. Food and beverages decelerated on a monthly basis to 0.82pc in April from a 1.17pc increase a month earlier, according to IBGE. Housing costs also decelerated to 0.24pc from 0.14pc in March. Transportation costs contracted by 0.38pc and posted the largest monthly contraction in April. Diesel prices posted the largest contraction at 1.27pc in April. Petrobras made three diesel price readjustments in April-May. By Maria Frazatto Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more