Shipowners are choosing to bunker in other ports in Asia besides Singapore whenever possible as very low-sulphur fuel oil (VLSFO) prices in the city-state seem comparatively higher, market sources told Argus.
VLSFO spot bunkers in Zhoushan and South Korea have been assessed at average discounts of $38/t and $36/t respectively versus Singapore over the past two weeks, according to Argus data.
Sharply lower Brent crude prices on 6 July are not expected to spur demand much in Singapore.
"Owners are not sure what to do and Singapore remains expensive," a London-based broker said.
"This huge drop just means that buyers are anticipating even larger declines," a local trader said.
Prices of VLSFO bunkers have been high for a while now on the back of tight cargo availability. The premium of VLSFO bunkers, or the price of delivered bunkers minus the cargo price, has averaged $100/t over the past month compared with typical values of $10-15/t.
Meanwhile, low demand for and surplus supplies of high-sulphur fuel oil (HSFO), together with VLSFO supply tightness in Singapore, have driven the Hi-5 or scrubber spread, the differential between VLSFO and HSFO, to record levels. The spread was assessed at an all-time high of $596.50/t on 5 July, Argus data show.
Singapore sold a total of 19.16mn t of bunkers during the first five months of this year, down from 21.15mn t over the same time last year, data from the country's Maritime and Port Authority show, signalling that the city-state is facing increasing competition from other regional ports.
