Demand for bunkers in Singapore will likely be hit by lower prices in China and recent crew change restrictions following the discovery of a Covid-19 cluster on board a bunker vessel in the city-state.
A new Covid-19 cluster was reported in Singapore on 24 April after four community cases were linked to an Indonesian sea crew member who tested positive for the virus. The four Indonesian nationals were working on board the same bunker tanker, the MT ALLI, as the earlier case.
A surge in Covid-19 infections in India also prompted Singapore's Maritime and Port Authority to ban crew changes at the port of Singapore involving non-residents with a recent travel history to Bangladesh, Nepal, Pakistan and Sri Lanka. The ban took effect at 11.59pm local time (3.59pm GMT) on 1 May. This follows an earlier ban on crew changes for those who have recently travelled to India.
This has led to some bunker traffic at Port Klang in Malaysia given the quarantine requirements in Singapore, a local buyer said.
"Some might also divert because of the container terminal congestion in Singapore, resulting from very-high volume flows and the Suez Canal congestion working its way out of the system," another local buyer said.
"The closing of the borders for those coming from south Asia will affect crew changes severely, which makes the case for buyers to divert to China with lower prices there all the more appealing," a local trader said.
Very low-sulphur fuel oil (VLSFO) prices at China's largest bunkering hub of Zhoushan have averaged a discount of $8.64/t to Singapore over the past month, according to Argus data. Zhoushan VLSFO bunkers were sold at an average premium of $1.90/t over the past year. This reversal was driven by profitable residual refining margins at refineries in China, causing a serious oversupply situation.
Market participants unanimously said they have seen a notable increase in activity in China compared with Singapore, with generally weak spot demand further dampening demand for bunkers in the city-state. Singapore yesterday announced it will reimpose tougher restrictions on gatherings and business activity in reaction to the recent emergence of new clusters of coronavirus cases.
Argus has reported an average of 5.5 spot bunker deals each day in May so far, down from 8 in April.
