The global fuel oil supply chain has in the recent past been impacted by tight product availability due to the war in Ukraine and the subsequent restrictions on Russian oil purchases. The Asian fuel oil market, which accounts for roughly half of the global marine fuel demand, has been severely stretched too. One of the most significant incidents of fuel contamination in recent history at the world's largest bunkering hub Singapore has only exacerbated the tight supply situation.Not surprisingly then, Asian fuel oil market participants have been closely monitoring the evolving demand-supply dynamic in China, a major producer-supplier of marine fuel. They are tracking not only the impact from oil demand loss, but also, how it may potentially sway the government's decision on the timing and quantum of the second round of fuel oil export quotas.In this podcast, S&P Global Commodity Insights' Rajesh NairAtsuko Kawasaki and Zhuwei Wang discuss the various scenarios that are likely to play out and its impact on the Asian fuel oil market.Related Infographic: Markets brace for oil, gas demand destruction as China pursues zero-COVID policyMore listening options:
Russia's invasion of Ukraine has triggered an unprecedented wave of sanctions against Moscow which are rippling through global commodity markets. In addition to official sanctions which continue to evolve, major self-sanctioning by industries looking to cut ties with Russia have deepened the market impact.Click here to see the full size version
The global fuel oil market is in turmoil on account of a lower amount of Russian oil flowing into the marine fuel oil pool and a fair share of blending components being used to produce higher-margin transportation fuels. Tightening sanctions on Russian oil has seen newer trade flows emerge. As Asian markets gear up for peak summer demand, trade flows are poised to undergo further changes. The recent fuel contamination issue at Singapore has further exacerbated product availability concerns.In this podcast, S&P Global Commodity Insights' Rajesh NairAtsuko Kawasaki and Zhuwei Wang talk about the outlook for the Asian fuel oil market.More listening options:
June 15-16, 2022 | 08:15 am - 05:30 pm SGT | SingaporeAsia Bunker and Shipping Summit We are excited to host the Asian Bunker & Shipping Summit in person, in Singapore, on June 15-16, 2022. The Summit will be focusing on everything bunker and shipping; from outlooks, regulation deep dives, analysis of the effects of energy transition, what options we have in fueling our ships from traditional bunker fuels to alternative fuels, and more.Attendees will include refiners, traders, ship owners, charterers, end-users, analysts, risk managers, brokers, lawyers, regulators, and policymakers, among many others. Since the implementation of IMO 2020 and the start of the pandemic, container rates have soared to unrecognizable levels, far surpassing previous all-time highs. With delays and vessel queues mounting, and a broader shift from 'just in time' shipping to 'just in case', the trailblazing container market, which is paving the way with future fuel adoption, is balanced on a knife-edge.On the other hand, tanker markets are sailing into headwinds with spot freight rates plummeting to levels that barely cover operating expenses of shipowners. Although oil demand is starting to revive, the OPEC production cuts have dried up cargo volumes for the tanker market. Daunting challenges are on the way with new decarbonization regulations expected to kick in soon. The bunker industry has had its own challenges as it grapples with the pandemic, with transparency, energy transition, efficiency through digitalization, and aiding shipping’s decarbonization journey being key themes in a landscape where there is intense competition and margins are being squeezed.On June 15-16, the Asian Shipping & Bunker Summit will host leading market participants in the region to discuss the top challenges and risk response strategies to help you stay at the forefront of the market.Register by March 25 to save $300 on your ticket. Receive a complimentary ticket when you register 4 pax for the event! Contact us to find out more.REGISTER NOW
With 2022's volatile gas prices causing uncertainty across the energy markets, the case for LNG as a marine fuel has been shaken. LNG has previously been called the frontrunner in the race for alternative marine fuels – is that still the case? Editors Sam Eckett and Piers de Wilde are joined by analyst Anastasia Zania to look at the current state of the market, and the future outlook for LNG bunkers.Tell us more about your podcast preferences so we can keep improving our shows. Take our two-minute survey here: https://bit.ly/plattspod22More listening options:
The commercial and financial ramifications of the Russia-Ukraine conflict will be felt for a long time. As the conflict escalates, sanctions have been imposed on Russian banks and shipping companies. This has meant that many companies are reluctant or unable to trade with Russia. In this podcast, S&P Global Commodity Insights' Pradeep Rajan, Sameer C. Mohindru, Zhuwei Wang and Shriram Sivaramakrishnan explain what the latest developments mean for the maritime sector, global trade, shipments and prices of key commodities including crude, refined oil products, grains and coal.Tell us more about your podcast preferences so we can keep improving our shows. Take our two-minute survey here: https://bit.ly/plattspod22
Apr 22 2022
Longer distances for coal and grains could be here to stay as consumers look for permanent alternatives to Russian commodities, the CEO of dry bulk company Golden Ocean said in an interview April 21. Dry bulk charterers looking to carry wheat and other crops have already started switching their attention to areas including the EU, Argentina and Australia to replace Black Sea cargoes, following Russia's invasion of Ukraine Feb. 24. Likewise, in coal markets, the US, South Africa, Australia, Colombia and Indonesia could replace Russian coal in Europe, while Russian coal could in turn go to India, market sources said. Market dislocation such as more coal heading from Australia to Europe are "highly unusual and inefficient," Golden Ocean CEO Ulrik Uhrenfeldt Andersen told S&P Global Commodity Insights. Nonetheless, they could be here to stay, in some shape or form. "We see a general movement away from dependency on Russian commodities. Therefore, we expect the changes in today's trade patterns to be long lasting," he said. Even if the war were to end immediately that diversification away from Russian goods would continue and this would support ton-miles, Andersen said. Trans-Atlantic coal shipments have picked up pace – the Hampton Roads-Rotterdam 70,000 mt coal route was last assessed by S&P Global at $26.25/mt April 21. It reached its year-to-date high of $28.50/mt March 24, up 104% from its year-to-date low of $14/mt Feb. 3. For grains, more spot activity has been reported out of the East Coast South America region as buyers look for alternatives to Black Sea supplies. The Santos to Qingdao 60,000 mt grains route reached a year-to-date high of $75/mt March 28, up more than 57% from its year-to-date low of $47.75/mt Feb. 4, according to S&P Global data. It was last assessed at $70.75/mt April 21. Significant volumes Around a quarter of all Russian coal exports in 2021 was shipped to Europe, according to S&P Global, with Panamaxes the predominant carriers. Russia exported more than half of the coal it produced in 2021, with exports at 262 million short tons, according to data from the US Energy Information Administration. The war has also affected global access to the Black Sea, with naval activity deterring exports of grains from both Ukraine and Russia. Black Sea ports are especially critical to grains shipments out of Ukraine and Russia; the two countries account for around 26% of global wheat exports. Russia has exported 26 million mt of wheat to date in the 2021-22 marketing year (July-June), accounting for 80% of the US Department of Agriculture's estimate for the year, and Ukraine 18 million mt, accounting for 90% of the USDA's estimate. Chinese lockdowns Prolonged lockdowns in China following coronavirus outbreaks have stoked concerns of escalating port congestion and supply chain backlogs. China is crucial for dry bulk demand and more volatility is expected for dry bulk freight rates amid China's recent COVID-19 restrictions and lockdowns. "The lockdowns are a two-edged sword," Andersen said. "On the one hand, they cause congestion and delays, obviously firming rates. But, on the other hand, if the lockdowns continue for a long time, it may impact the economic growth in China, which is negative for demand," he said. For now, the company is enjoying the support to freight rates but hopes China will open up soon, Andersen said. The build and design of dry bulk vessels can make them particularly hard to decarbonize, a marine engineering source said. However, before complex sustainable fuel solutions are reached there are a number of more straightforward things shipping companies can do to reduce emissions and fuel costs. "There are plenty of low-hanging fruits to reduce emissions," Andersen said. The company is looking into digitalization and improving data quality to make better decisions on speed and hull cleaning. "We are also focusing on upgrading the vessels with energy-saving devices such as low-friction paint, Mewis Ducts, propeller boss cap fins and so on. We believe these initiatives alone can save 10% or more on bunker consumption," he said. This reduction in bunker costs and emissions also helps prepare the company for the upcoming inclusion of shipping in the EU's Emissions Trading System. The European Commission's current legislative proposal would bring CO2 emissions from shipping into the EU ETS from 2023 but with companies only having to surrender 20% of their obligation that year, rising to 45% in 2024, 70% in 2025 and 100% in 2026. EU proposals seek to cover 50% of emissions into and out of EEA ports to third countries, in addition to 100% for all intra-EEA routes. "Having an efficient fleet will tackle the EU ETS, any future carbon levies and generally make us the preferred choice by our customers," Andersen said. The company has taken the first steps on carbon trading; it recently applied for carbon offsets on the back of investments in emission-reducing technology.
Apr 22 2022
All-inclusive container rates into North America were rangebound at depressed levels during the week ended April 22 amid weak demand for cargoes out of Asia. As many North Asian cities and production regions remain under lockdown, US cargo owner sources indicated that Asian exports were increasingly difficult to book, compounded by a raft of port omissions on the part of ocean liners. Despite this, demand remained low, as the market is off-season. "Not seeing anything in five digits," a North American forwarder source said. "No premiums at all, I don't know if that's just temporary because of what's happening in China." During the week ended April 22, S&P Global Commodity Insights heard scant all-inclusive rates on the North Asia-North America run at slight premiums to market FAK rates, although significant pockets of FAK space were available out of North Asian gateways, particularly on bookings made with new entrants and charter players. Sources pegged inbound premium rates at just $1,000-2,000/FEU above base rates for prompt loadings. While booking activity remained muted against pre-Lunar New Year demand, sentiment held that purchasing and resultant rates were primed to hike from mid-May onward as the market pivots towards the traditional peak import season. Southeast Asia-North America lane steady The all-inclusive premium rates on the Southeast Asia-North America route were largely stable in the week ending April 22. The all-inclusive container freight from Southeast Asia for East Coast North America was heard at $17,000-$18,000/FEU and at $15,000-$16,000/FEU for West Coast North America, sources said. The all-inclusive premium rate was steady despite softening of the basic FAK rate on the Southeast Asia-West Coast North America route. Basic freight on this route dropped by $1,700/FEU on the week to $7,800/FEU, as shippers preferred to route cargoes to the US East Coast in anticipation of delays on the west coast, where port labor union talks are expected to start in May. A source said the negotiations in the past have been rife with disputes that led to long delays in clearing shipments from ports. "This time logistics are already stretched, and shippers don't want to take any chances," the source said, adding that they are now preferring to shift cargoes to East Coast North America. Although there was a drop in basic freight, the premium on this route was stable. "Most shippers in the sport market are paying the premium price to secure bookings because even though the carriers display lower FAK rates on their websites, there is no space at that price point," another source said. Market participants expected premiums to increase in May once lockdowns in China are lifted and demand for containers from Far East Asia tightens equipment availability in Southeast Asia. Asia-Europe market trends further south Container rates from Asia to Europe continued to slip, albeit gently, over the course of the week as demand continued to tail off, with the market waiting for news from Shanghai before booking more goods to leave the region. "Rates are coming down because there just isn't demand, it's a simple as that," a European freight forwarder said. "Why pay for delays when you could just wait?" As a result of the lockdowns, however, delays have started rising at other Chinese ports, including a larger vessel queue offshore Shanghai. "People are starting to pick up their enquiry from SE Asia where they can," a third freight forwarder said. "There are a few other Chinese major ports that are seeing some form of spike in demand, if there is any way to move goods out of China, people are eyeing it up. Sadly as Shanghai is the largest port, no matter what people try and do, there simply isn't the capacity at other ports to export goods." Platts Container Rate 1, from North Asia to the North Continent, fell a further $100 on the week to $12,000/FEU, the same level as in mid-June 2021 and the lowest rates recorded for over ten months. Meanwhile, PCR11, from North Asia to the UK, fell $150 over the same period to $13,100/FEU April 22.
Apr 21 2022
US President Joe Biden announced April 21 that US ports would ban all Russian-affiliated ships, a move seen as largely symbolic as the port calls are rare and the US has already zeroed out its imports of Russian oil. The UK and Canada previously blocked access to their ports by Russian-affiliated ships, and the EU has proposed a similar measure in response to the war in Ukraine. Biden said he was taking the step alongside allies to "further deny Russia the benefits of the international economic system." "That means no ship—no ship that sails under the Russian flag or that is owned or operated by Russian interests will be allowed to dock in a United States port or access our shores," Biden said. Russian shipowner Sovcomflot owns and operates 133 tankers, including 50 Aframax 17 Suezmaxes and two VLCCs. In the Americas, the Aframaxes have tended to be primarily employed on the US Gulf Coast-Transatlantic runs, as major oil companies transported light sweet US crude barrels to their Europe refining outlets. Currently none of the Sovcomflot-operated tankers are positioned in or heading toward the USGC, according to Platts cFlow trade-flow analytics software. "It already has impacted the Aframax shipping markets in the Americas," a shipowner said, commenting on the impact of President Biden's announcement that US ports would ban all Russian-affiliated ships. "Everybody has been dumping their time charters back in March. Sovcomflot vessels floated in the Gulf for two weeks initially when US sanctions on the import of Russian oil were announced in early March." A Russian-flagged crude oil tanker was seized in Greek waters April 15, according to Greece's maritime ministry. The Pegas has spent about a week off the Greek port of Karystos and its last port was Martas, Turkey, according to Platts cFlow trade-flow analytics software. The US Treasury Department Feb. 22 listed the Pegas among five Russian commercial vessels designated as blocked entities. They cannot access the US financial system, and US persons are banned from dealing with them. April 22 marks the end of the 45-day wind-down period for Biden's executive order banning US imports of Russian oil, natural gas, and coal. US imports of Russian crude zeroed out for the three weeks to April 15, according to the latest Energy Information Administration data. January-March imports averaged 54,800 b/d, down sharply from 2021 imports of 199,000 b/d, according to EIA data.
Apr 18 2022
Retail marine fuel spot pricing entered the week of April 18-22 trending higher throughout the Americas, with muted market activity being met recently with higher indications and offers as suppliers adjust values in line with gains in global crude indicators. Latin America Latin American ports saw spot bunkers pricing move higher the week of April 11-14, tracking a stronger US crude complex as Brent and ULSD futures provided support. Panama spot 0.5%S marine fuel bunkers value rose $60 during the period to close the shortened week at $900/mt ex-wharf Balboa. MGO value in Panama also moved up as the ex-wharf Balboa assessment gained $108 to price at $1,248/mt ex-wharf April 14 -- up nearly 9.5% from the April 8 close. Some sources in Panama were monitoring reports of possible contaminated marine fuel in Houston, although there was no sentiment pointing to an immediate impact for the key Central American hub. "Hope this is just a false alarm for Houston," the Panama source said. In Brazil, the state-owned refining sector was seen increasing pricing throughout the week, with retail assessments reacting in lockstep. The delivered-Santos spot 0.5%S fuel price rose $49 from April 11-14 to last close at $916/mt while the MGO assessment rose $15 over the period to $1198/mt delivered. Neighboring Argentina saw spot assessments show mixed movements throughout the week, with relatively dormant demand and shifting supply fundamentals for some market participants, sources said. Spot 0.5%S pricing for Buenos Aires rose $46 during the week to be assessed most recently at $960/mt delivered. MGO in the key Mercosur port rose $17 to last price at $1,237/mt delivered on April 14. Some price volatility was there to close the week in Argentina, as a few participants moved up pricing with rising Brent futures to close the week, a source said. Early April-14, talk of $1,230/mt delivered MGO pricing was later met with talk of indications in the $1,240s/mt, sources said. "There is no $1,230/mt [MGO price] ... not now," a trader source said late in the day, citing additional gains from both Brent and diesel futures. The Peruvian market saw some of the most pronounced movements and price volatility, as supply tightness was a concern for Callao, sources said. Spot 0.5%S pricing for Callao rose $140 (12.5%) during the week to close April 14 at $1,260/mt delivered. Similarly, the MGO spot price for Callao rose $55 (4%) to end the week at $1,415/mt delivered. US East, West Coasts On the US East Coast, bunker fuel spot pricing rose in the week to April 14 ahead of the Easter holiday. All marine fuel products in New York rose higher. 0.5%S fuel oil gained $72/mt to $951/mt ex-wharf while marine gasoil gained further $120 to 1,337/mt ex-wharf. Philadelphia 3.5%S IFO 380 tracked the movements seen in New York, moving $49/mt higher to $775/mt ex-wharf. Charleston marine gasoil gained $169 to $1,384/mt ex-wharf, tracking higher ULSD NYMEX futures and market feedback. Spot inquiries for US spot retail market were mostly quiet for the East Coast On the US West Coast, Los Angeles 0.5%S fuel oil climbed $31 to $931/mt ex-wharf while marine gasoil gained $102 to $1,242/mt ex-wharf. In Vancouver, fuel oil 0.5%S saw a rise of $26/mt to $860 on demand feedback holding prices lower to the movements seen in the underlying market. Marine gasoil in Vancouver gained $102 to $1,260/mt ex-wharf. Cruise ship season is expected to increase ship numbers and demand for marine fuel in Vancouver this week, although all term contracts, a source said. Hence, it is still uncertain how this will impact the spot retail market in Vancouver. US Gulf Coast On the US Gulf Coast, spot bunker fuel prices also moved higher with a stronger US crude complex. In Houston, 3.5%S IFO 380 moved $62 higher to $718/mt ex-wharf while 0.5%S moved $70 to $920. Marine gasoil in Houston saw a sharp rise of $115 to $1,272/mt ex-wharf. Talks of possible marine fuel contamination In Houston caused concern and uncertainty in the spot fuel market. However, confirmation still awaits for tracing the source of contamination of the fuel, and no direct impact to supply or demand of spot marine fuel was seen as of date, source said. New Orleans moved in line with the movements seen in Houston, with 0.5%S gaining $70 to $975/mt ex-wharf. Marine gasoil in New Orleans saw sharp gains of $115 to $1,320/mt ex-wharf. Spot 3.5%S IFO in New Orleans gained $62 to $787/mt ex-wharf April 14.
Apr 18 2022
The Singapore low sulfur fuel oil market is likely to see supply tightness in the April 18-22 trading week as strong gasoil crack spread continuously draws LSFO blending components to the middle distillate market. The high sulfur fuel oil market is expected to see support due to ongoing specification issues, which limits the number of high sulfur bunker suppliers who have spot availability. Crude oil futures opened higher in Asia April 18, with June ICE Brent trading at $112.40/b at 0300 GMT, up from $108.61/b at the 0430 GMT Asian close April 14. Marine fuel 0.5%S ** Singapore Marine Fuel 0.5%S May-June swap spread strengthened in the week of April 11-14 due to supply tightness in cutter stocks. The spread was assessed at $26.50/mt on April 14, up from $20.50/mt on April 8, S&P Global Commodity Insights data showed. ** The downstream low sulfur bunker fuel market was likely to remain supported, but equally, not necessarily strengthen significantly from prevailing lofty levels that it has reached in the recent past, according to market sources. ** Even as the premium for IMO-compliant marine fuel sold in Singapore on a delivered basis had strengthened in the recent past, the differential -- to benchmark upstream Singapore Marine Fuel 0.5% cargo -- has remained capped, a situation that was likely to prevail, if not inch lower in the near term, market sources said. ** Steep backwardation at the front of the Singapore marine fuel 0.5% swaps curve would likely instigate sellers in the downstream market -- especially those that offer product on an ex-wharf basis -- to make competitive offers in a bid to move oil than to hold and roll it to the next month, traders said. ** Even as the premium for Singapore-delivered marine fuel 0.5% bunker averaged $34.87/mt in the week ended April 14, up from the previous week's average of $29.92/mt, the same for product sold on an ex-wharf basis has more or less remained steady at $25.87/mt, down a notch from the previous week's average of $25.92/mt, S&P Global data showed. ** Limited LSFO inventories in Japan is expected to cap available stockpiles for bunker sales, while traders expect delivered premiums to stay supported throughout April. ** Rising LSFO stockpiles in South Korea is expected, while local refineries are expected to gradually wind down springtime maintenances and restart operations, market sources said. ** Healthy demand for both the Zhoushan LSFO ex-wharf and delivered grades is likely to buoy premiums, while buyers are not anticipating lockdowns in Shanghai to impact bunker supplies, sources said. High sulfur fuel oil ** Both 180 CST and 380 CST grades are expected to remain supported over April 18-22 despite the weakening market structure in the European market. ** The 180 CST grade found strong demand from South Asia, especially from Pakistan. Pakistan State bought 135,000 mt of 180 CST HSFO with maximum 3.5% sulfur for delivery in the first half in May. ** In the downstream bunker market, the Singapore delivered bunker premium to over Singapore 380 CST high sulfur fuel oil cargo assessment was likely to trade at prevailing multiyear high levels. ** Traders attributed this to tight availability on account of less-than-usual Russian oil finding its way into the marine fuel oil pool and a still-prevailing concerns over contaminated fuel at the city-state, which had limited the number of suppliers to source product from. ** Tight prompt availability has meant that the earliest that most suppliers are able to offer product to the spot market on a delivered basis is around 9-10 days forward. **The premium for Singapore-delivered 380 CST high sulfur bunker has sky-rocked in the recent past. The differential averaged $62.24/mt in the week ended April 14, up from the previous week's average of $33.88/mt, S&P Global data showed. ** The lifting of quarantine measures since April 1 led to an influx of bunker demand, which traders expect likely to further tighten Hong Kong's HSFO inventory through May, as suppliers source for replenishment cargoes in the meantime. ** As HSFO supplies tighten at Zhoushan and Shanghai, traders expect bunker premiums to stay supported, while severe port congestions at both ports have reportedly not affected demand, according to local bunker suppliers. ** Sellers in South Korea are eager to move HSFO cargoes as downstream bunker demand edges higher, while buyers divert requirements and skip bunker-only calls at Singapore due to the recent surges in HSFO delivered premiums at the world's largest bunker hub, South Korea-based traders said.
Apr 11 2022
In this week’s Market Movers Americas, presented by Colleen Ferguson: • Replacing Russian oil skyrockets tanker freight (00:20) • Rail issues hinder US spot coal movements (01:11) • Heat wave set to widen spot gas basis spreads (01:49) • MISO to unveil capacity auction results (02:33) View Full Transcript In this week’s Market Movers: Europe’s efforts to replace Russian oil make tanker freight surge, slow rail cycle times impair coal movements, warm weather in the Northeast US is set to widen spot gas basis spreads, and MYSO will publicly discuss its latest capacity auction results. Starting in shipping, Europe’s efforts to replace 2.7 million barrels per day of self-sanctioned Russian crude and nearly 900,000 barrels per day of clean oil products will continue to drive US Gulf Coast-loading tanker freight rates this week. Since Russia’s invasion of Ukraine, freight rates on the USGC-Europe routes have risen 74.1% for crude tankers and 260% to transport 38,000 metric tons of mainly diesel and naphtha cargoes. High export volumes have rapidly depleted the number of tankers available to load on the US Gulf Coast, and charterers will increasingly eye upsizing stems wherever possible. The Very Large Crude Carriers and Long Range 1 tankers will see heightened interest for voyages to Europe. In coal, slow rail cycle times are preventing US spot thermal and metallurgical coal from getting to seaborne markets despite surging global demand amid the war in Ukraine. Ports have coal export capacity, but there’s no rail service available to bring the additional coal to market. Without enough trains to take coal away, production has stopped at some mines as stockpiles reach permitted maximums. This brings us to our social media question of the week: With transportation issues ongoing, are end-users in danger of energy shortages or will suppliers provide it at any cost? Tweet us your thoughts. Moving to natural gas, a minor heat wave forecast in the US Northeast for April 12-14 is expected to slash heating demand in the area for natural gas. This could dramatically widen regional spot gas prices’ discounts to cash Henry Hub in the near term. S&P Global projects that Northeast residential-commercial demand will average 5.3 billion cubic feet per day for that period, down 45% from the April 1-7 average of 9.6 billion cubic feet per day. CustomWeather forecast that average temperatures in the Northeast will rise into the low 60s Fahrenheit for April 12-14, which would be about 10 degrees above normal for mid-April. And finally in power, the Midcontinent Independent System Operator will discuss its latest capacity auction results during a public meeting on April 15. MYSO will outline the price and amount of capacity that market participants obtained to meet resource adequacy requirements for the period starting June 1. The planning resource auction ran from March 28 to March 31. The Platts Atlas of Energy Transition is your map to the sustainable commodity markets of the future. You can explore the Atlas by visiting the address displayed on your screen. Thanks for kicking off your Monday with us and have a great week ahead.
Apr 11 2022
Chinese refineries will slash throughput in April and lift oil product exports from initial plans to compensate for falling domestic demand due to COVID-19 lockdowns. As a result, 10 refiners from the 11 polled Sinopec and PetroChina refining sources said they have cut their April throughput by 30,000-100,000 mt from their initial planned volumes or plan to reduce. These include Sinopec's 14 million mt/year Shanghai Petrochemical, which has been locked down since late March. It will lower throughput by 40,000 mt to 1.19 million mt in April. The neighboring 8 million mt/year Anqing Petrochemical plant has trimmed throughput several times since April 1 to get the current target of about 550,000 mt from an initial 650,000 mt. Another neighbor, the 16 million mt/year private greenfield Shenghong Petrochemical has further delayed its startup, with no fixed commission schedule, given high oil prices coupled with weak product demand, according to a company source. Down south in Guangzhou, oil product sales are also slow. The 13.2 million mt/year Sinopec plant has cut throughput by 40,000 mt from planned to 990,000 mt in April. In eastern China's Shandong province, independent refineries have even cut their average utilization rates to 49.4% as of April 6, against 57.1% a month earlier, according to local information provider JLC. In northeast China, three of PetroChina's refineries in Liaoning province have reduced their April throughput by 30,000-50,000 mt from original plans, according to sources with the plants. Meanwhile, Russian crude imports by China's independent refiners slumped 44.4% year on year to a 10-month low of 1.5 million mt in March as a regular buyer ChemChina shut for maintenance its Huaxing Petrochemical. The volume is expected to fall further as a few independent refineries step away from Russian cargoes amid uncertainties in payment and shipping amid the ongoing Russia-Ukraine war and negative refining margins. Japan's largest refiner ENEOS does not plan to sign any Russian crude oil import contracts following Russia's invasion of Ukraine, ENEOS Holdings Chairman Tsutomu Sugimori said March 22. "Following the Ukraine invasion, we have not signed any contracts [for Russian crude]," Sugimori told an online press conference as the president of the Petroleum Association of Japan. "We do not expect to import [Russian crude] for the moment." ENEOS, however, will receive a few ships carrying Russian crude cargoes until April from its purchase contracts signed prior to the invasion in February, Sugimori said. Japan's second largest refiner Idemitsu Kosan has decided to suspend new Russian crude oil trades for imports amid uncertainty over payment and logistics disruptions, a company spokesperson told S&P Global Commodity Insights March 23. Cosmo Oil, Japan's third largest refiner, does not currently procure Russian crude oil, and it does not have any plans to procure the barrels, a Cosmo Energy Holdings spokesperson said March 23. Japanese refiner Taiyo Oil is currently seeking clarity about whether it can continue to lift term crude oil supply from Russia, which it relies on for 20%-30% of its crude procurement, amid uncertainty over payment settlements and shipping, a company spokesperson said April 4. Meanwhile, Japan's Ministry of Economy, Trade and Industry revoked March 31 Taiyo Oil's safety inspection permission at its sole 138,000-b/d Kikuma refinery at Shikoku in western Japan following its violations of safety regulations. Following the revocation, Taiyo Oil will now have to conduct a refinery maintenance program every year and get it approved by the local authorities until the company restores the permission, a METI official said. Prior to the suspension of its safety inspection permission, Taiyo Oil planned to shut two crude distillation units at the Kikuma refinery over May 30-Aug. 17 for a large scheduled maintenance program that takes place every four years. Separately, Japan's largest refiner ENEOS said March 28 it restarted the 170,000 b/d No. 2 crude distillation unit at the Kawasaki refinery in Tokyo Bay on March 25 after it was shut March 16 due to earthquake-led power outages. ENEOS said April 4 that it plans to restart the distillation unit at the Sendai refinery in the northeast and the Chiba refinery in Tokyo Bay in mid-April. At the Sendai refinery, all refining units were shut while all refining units at ENEOS's Chiba Refinery and the No. 2 crude distillation unit at the 247,000 b/d Kawasaki refinery, both in Tokyo Bay, were suspended. In other news, China aims to develop renewables-based hydrogen and curb fossil fuel-based hydrogen production which currently dominates the nation's hydrogen supply, according to its hydrogen industry development plan. The development plan jointly released by China's top economic planner National Development and Reform Commission, or NDRC, and energy regulator National Energy Administration lays out high-level guidelines for its hydrogen supply chain from 2021 to 2035. China has already become the world's largest hydrogen producer with 33 million mt/year of supply, but 63.5% of this is produced from coal, 21.2% as industrial byproduct, 13.8% from natural gas and only 1.5% from water electrolysis that is not fully powered by renewables-based electricity, according to the China Hydrogen Alliance. Quantitative targets are only set up until 2025, including building up 100,000-200,000 mt/year of renewables-based hydrogen production, realizing 1 million-2 million mt/year of CO2 emissions reduction and 50,000 hydrogen fuel cell vehicles or FCEVs by 2025, the report said. By 2030, the plan aims to build up a more comprehensive supply system for clean hydrogen and enable broad applications of hydrogen in different sectors to support China's carbon peaking 2030 target. By 2035, the plan expects to have a more sophisticated ecosystem for hydrogen, covering diverse applications in transportation, energy storage, industrial and other sectors. Renewables-based hydrogen will occupy a significantly increasing share in China's energy consumption mix and become an important backbone for the nation's energy transition, the plan said. NEW AND ONGOING MAINTENANCE Refinery Capacity b/d Country Owner Unit Duration Negishi 270,000 Japan ENEOS Part Closure'22 Wakayama 127,500 Japan ENEOS Full Closure'23 Kikuma 138,000 Japan Taiyo Oil Full May Hainan 184,000 China Sinopec Full Mar Jinzhou 150,000 China Petrochina Full Apr Yangtz 290,000 China Sinopec Full Mar Tahe 100,000 China Sinopec Full Mar Huaxing 140,000 China ChemChina Full Apr UPGRADES Zhenhai 230,000 China Sinopec Expansion NA Jinling 420,000 China Sinopec Upgrade NA Haiyou 70,000 China Haiyou Upgrade On hold Huizhou 440,000 China CNOOC Upgrade NA Chiba 190,000 Japan Idemitsu Upgrade 2020 Changling 230,000 China Sinopec Upgrade NA Qinzhou 240,000 China Guanxi Upgrade 2023 Fujian 280,000 China Sinopec Upgrade NA LAUNCHES Tangshang 300,000 China Xuyang Group Launch 2021 Jieyang 400,000 China Guandong Launch 2021 Huajin Aramco 300,000 China Joint Launch 2024 Lianyungang 320,000 China Shenghong Launch Launched Yulong 400,000 China Yulong Launch 2022 Near-term maintenance New and revised entries Japan ** Japan's Cosmo Oil shut one of two crude distillation units at its 177,000 b/d Chiba refinery in Tokyo Bay after a fire at a furnace April 2, a company spokesperson said April 5. The fire broke out at around 6:15 pm local time (0915 GMT.) April 2, and the local fire department confirmed that it was put out at 11:45 pm, the spokesperson said. No one was injured, and it was not clear when Cosmo would be able to resume the CDU, the spokesperson said. China ** PetroChina's Yunnan Petrochemical refinery in southwestern Yunnan province, which shut its 4 million mt/year residual hydrogenation unit and some of its relative downstream facilities due to a blast in December, is fully back online. ** ChemChina has shut for maintenance its Huaxing Petrochemical. Works started on March 15. Existing entries China ** Sinopec Hainan plans to completely shut for nearly two months of scheduled maintenance March 15-May 10, and there will no oil products exports in April. The Hainan refinery plans to process 370,000 mt of crude oil in March, which would be equivalent to about 47% of its nameplate processing capacity, down from 102% in February. ** PetroChina's Liaohe Petrochemical will shut for maintenance over April-June. ** Sinopec's Yangtz Petrochemical is scheduled to shut the entire refinery for maintenance over March-April. ** Sinopec's Tahe Petrochemical is scheduled to shut for maintenance from mid-March to late April. Japan ** Japanese refiner Taiyo Oil plans to shut two crude distillation units at its sole Kikuma refinery over May 30-Aug. 17 for scheduled maintenance, a company spokesperson said March 8. It will halt a 106,000 b/d No. 1 CDU and a 32,000 b/d No. 2 CDU. "This will be a large-scale planned maintenance [which is done] every four years, and we plan to shut the No.1, the No. 2 CDUs and the [32,000 b/d] RFCC at about the same time," the spokesperson said. ** Japan's largest refiner ENEOS will decommission the sole 127,500 b/d crude distillation unit at its Wakayama refinery in western Japan in October 2023. ** Japan's ENEOS will decommission the 120,000 b/d No. 1 CDU at its 270,000 b/d Negishi refinery in Tokyo Bay in October 2022. It will also decommission secondary units attached to the No. 1 CDU, including a vacuum distillation unit and fluid catalytic cracker. ENEOS will also decommission a 270,000 mt/year lubricant output unit at the Negishi refinery. Upgrades Existing entries ** Sinopec plans to add a petrochemical plant to its Fujian refining complex as part of its phase two expansion plans, according to a company source. "An ethylene plant will likely be added," said the source, without giving more details as the plans are still in early stage. The adding of the new chemical plant, will likely help lift the overall run rates at the refinery, sources said. On March. 8, Saudi Aramco and Sinopec said they would study possible capacity expansion at the Fujian refinery. The two companies will undertake a feasibility study looking into "optimization and expansion of capacity", Saudi Aramco said in a statement. ** Chinese Sinopec's refinery Zhenhai Refining and Chemical has a 27 million mt/year refining capacity and a 2.2 million mt/year ethylene plant, after its phase 1 expansion project of 4 million mt/year crude distillation unit and a 1.2 million mt/year ethylene unit was delivered end-June. The company aims to grow its refining capacity to 60 million mt/year and 7 million mt/year of ethylene by 2030. ** PetroChina's Guangxi Petrochemical in southern Guangxi province planned to start construction at its upgrading projects at the end of 2021, with the works set to take 36 months. The projects include upgrading the existing refining units as well as setting up new petrochemical facilities, which will turn the refinery into a refining and petrochemical complex. The project will focus on upgrading two existing units: the 2.2 million mt/year wax oil hydrocracker and the 2.4 million mt/year gasoil hydrogenation refining unit. For the petrochemicals part, around 11 main units will be constructed, which include a 1.2 million mt/year ethylene cracker. ** Sinopec's Changling Petrochemical in central Hunan province plans to start construction for its newly approved 1 million mt/year reformer. ** Japan's Idemitsu Kosan plans to start work on raising the residue cracking capacity at its 45,000 b/d FCC at Chiba. ** Axens said its Paramax technology has been selected by state-owned China National Offshore Oil Corp. for the petrochemical expansion at the plant. The project aims at increasing the high-purity aromatics production capacity to 3 million mt/year. The new aromatics complex will produce 1.5 million mt/year of paraxylene in a single train. ** Construction of a new 1 million mt/year coker at Chinese independent refinery Haiyou Petrochemical, in eastern Shandong, has been put on hold. ** Sinopec's Jinling Petrochemical refinery in eastern China will build a new 600,000 mt/year VDU. Launches New and revised entries ** Private greenfield Shenghong Petrochemical has further delayed its startup, with no fixed commission schedule, given high oil prices coupled with weak product demand. The refinery initially planned to start up in end August, but this was postponed to end-December and then to January. ** PetroChina has started constructing a low sulfur bunker fuel oil project with 2.6 million mt/year production capacity at its upcoming Guangdong Petrochemical. PetroChina targets to commission Guangdong Petrochemical by end-2022. The Guangdong plant is PetroChina's latest greenfield integrated refinery in southern China Jieyang city, featured with a 2.6 million mt/year aromatics unit and a 1.2 million mt/year steam cracker. Existing entries ** Saudi Aramco said it has "taken the final investment decision" to participate in the development of a major refinery and petrochemical complex in China which is expected to be operational in 2024. The complex will be developed by Huajin Aramco Petrochemical Company (HAPCO), a joint venture between Aramco, North Huajin Chemical Industries Group Corporation and Panjin Xincheng Industrial Group. The decision is subject to finalization of transaction documentation, regulatory approvals and closing conditions. The project represents an opportunity for Aramco to supply up to 210,000 b/d of crude feedstock for the complex. The complex involves a 300,000 b/d refinery, 1.5 million mt/year ethylene-based steam cracker and a 1.3 million mt/year PX unit, S&P Global Commodity Insights has reported previously. ** Honeywell said China's Shandong Yulong Petrochemical will use "advanced platforming and aromatics technologies" from Honeywell UOP at its integrated petrochemical complex. The complex will include a UOP naphtha Unionfining unit, CCR Platforming technology to convert naphtha into high-octane gasoline and aromatics, Isomar isomerization technology. When completed Yulong plans to produce 3 million mt/year of mixed aromatics. Shandong's independent greenfield refining complex, Yulong Petrochemical announced the start of construction work at Yulong Island in Yantai city at the end of October 2020. Construction was expected to be completed in 24 months. The complex has been set up with the aim of consolidating the outdated capacities in Shandong province. A total of 10 independent refineries, with a total capacity of 27.5 million mt/year, will be mothballed over the next three years. Jinshi Petrochemical, Yuhuang Petrochemical and Zhonghai Fine Chemical, Yuhuang Petrochemical and Zhonghai Fine Chemical will be dismantled, while Jinshi Asphalt has already finished dismantling. ** China's coal chemical producer Xuyang Group has announced plans to build a greenfield 15 million mt/year refining and petrochemical complex in Tangshang in central Hebei province.
Apr 11 2022
The Singapore low sulfur fuel oil supply is expected to remain tight in the April 11-15 trading week as higher gasoil crack spread continuously draws LSFO blending components to the middle distillate market. The high sulfur fuel oil market is also likely to stay strong in the week due to a decline in an inflow of the Middle Eastern cargoes into Asia after the Russia-Ukraine conflict. Crude oil futures opened lower in Asia April 11, with June ICE Brent trading at $100.47/b at 0300 GMT, down $1.11/b from the 0830 GMT Asian close April 8. Marine Fuel 0.5%S ** Singapore Marine Fuel 0.5%S May-June swap spread weakened in April from March. The front-end time spread averaged $21.29/mt over April 1-8, down from $30.42/mt in March, S&P Global Commodity Insights data showed. Market sources said supply would stay tight despite weaker time spread as sulfur and viscosity cutter stocks, such as vacuum gasoil and light cycle oil are taken by the gasoil market as the gasoil crack spread has been strong, fuel oil traders said. The time spread has weakened following Brent swaps while the front-end May-June spread averaged $1.27/b over April 1-8, down from $3.33/b in March. ** Market optimism in the downstream bunker market stemmed from a less-than-ample availability of finished grade product, especially for delivery on a prompt basis; only a few suppliers were still in a position to offer product to the spot market for delivery less than around 10 days, traders said. ** The delivered market was pricing higher on account of a rising replacement cost for bunker sellers due to a firming upstream market, traders said. The premium for Singapore-delivered marine fuel 0.5%S bunker over the benchmark upstream Singapore marine fuel 0.5% cargo assessment averaged $29.92/mt in the week ended April 8, up from the previous week's average of $23.65/mt, S&P Global data showed. ** Market volatility is still likely to cap demand for Singapore-delivered marine fuel 0.5%S, whereas stockpiles in the downstream market was heard balanced against demand, according to local bunker suppliers. ** In Fujairah, a tight prompt availability situation coupled with limited slots available for scheduling barge delivery of IMO-compliant product on a prompt basis to the spot market was likely to help set a floor for Fujairah-delivered marine fuel 0.5%S bunker premium. ** Uptick in LSFO bunker demand is likely to drawdown inventories at the port of Hong Kong for the rest of April, following the easing of quarantine measures for bunker-only calls since April 1, bunker suppliers said. ** Traders anticipate LSFO bunker inventory shortfalls in Japan to prolong despite the resumption of loadings for smaller parcels expected during the week started April 11 at Idemitsu and ENEOS refineries. ** Steady downstream demand for Zhoushan-delivered marine fuel 0.5%S amid limited availability of the ex-wharf grade is expected to buoy premiums, according to market sources. High Sulfur Fuel Oil ** Both 180 CST and 380 CST grades are expected to remain tight as US refiners increasingly take HSFO from the Middle East as they are no longer buying Russian fuel oil. ** The 180 CST grade is tight in particular as demand from South Asia has been surging. As a result, the Singapore 180 CST cash differential to MOPS strip rose to $31.66/mt on April 8, the highest since Nov. 5, 2019, when it stood at $34.66/mt, S&P Global data showed. The 180 CST-380 CST spread hit an all-time high for three days in a row to rise to $56.75/mt on April 8, S&P Global data showed. ** The prevailing concerns around contaminated fuel at the city-state were also limiting the number of suppliers to source the product from, bunker traders said. Tight prompt availability has meant that the earliest that most suppliers are able to offer product to the spot market is around 10 days forward. ** This in turn was likely to have a cascading effect on Singapore-delivered 380 CST high sulfur bunker premium, which has indeed sky-rocketed in the recent days. The premium for Singapore-delivered 380 CST high sulfur bunker over Singapore 380 CST HSFO cargo, which averaged $33.88/mt in the week ended April 8, was up from the previous week's average of $23.83/mt, and stood at a near two-year high $36.67/mt on April 8, S&P Global data showed. ** Amid above-average volumes of fixtures since April, bunker suppliers expect rising upstream availability of HSFO cargoes in Hong Kong to supply the strengthening downstream demand. ** The recent diversion of inquiries for delivered HSFO to South Korea is expected to lift bunker demand while stockpiles remain ample, as buyers were heard skipping bunker-only calls in Singapore amid quality concerns.
Apr 09 2022
Weather delays at major East Coast Mexico products ports and a challenging gasoline arbitrage on the 37,000 mt UK Continent-US Atlantic Coast route stand in the way of loading clean petroleum products on the US Gulf Coast and transporting them to the current high demand regions in South America and across the Atlantic. A week-long fixing spree over March 30-April 8 has led freight to surge 125% on the 38,000 mt USGC-Transatlantic runs and 98% and 100% on the interregional benchmark routes to Chile and Brazil. Market participants said April 8 that Americas clean tanker rates could continue at current peak levels for a while longer. "There are still cargoes working 15-20 windows where supply of tonnage is thin," said a shipowner. "Maybe in a few weeks with ballasters [freight] might level out." The Americas clean tanker markets have witnessed a hefty fixing spree since March 31, leading to depleted tonnage and pushing freight to impeccable heights. Freight for the 38,000 mt USGC-Transatlantic runs were last assessed at w450 April 8, up w100 on the week and w185 on the peak rate during the floating storage boom, when freight was assessed at w265 April 27, 2020, according to data from S&P Global Commodity Insights. Weather-related delays at Mexico's eastern ports have added to concerns over tanker tonnage replenishment on the USGC, following heightened charterer inquiries to cover diesel and naphtha stems in place of self-sanctioned Russian barrels and strong diesel demand on the USGC-Caribbean and USGC-South America runs. Mexico delays Roughly 27 Medium Range tankers have been waiting to discharge at the East Coast Mexico ports of Tuxpan, Pajaritos, Veracruz and Tampico since April 7, as a cold front has caused some ports to close completely, market sources said. While the port of Pajaritos is allowing already docked ships to unload product, Tuxpan is not letting any tankers operate, making seven MRs, which typically carry 38,000 mt of refined product, buoy nearby, according to market sources based in Mexico. "Ships that have already entered the Tuxpan port prior to the close are allowed to unload, but the rest are buoyed, it's been provoking certain delays," said a market source based in Mexico. Although proximity was not an issue compared with ships ballasting from longer-haul destinations, such as Brazil, Chile, or even Europe, where round trips range between 22-36 days at a speed of 13 knots, delays for tankers that usually recycle back to USGC from short-haul trips within seven to 14 days had exacerbated the current extremely tight tonnage count. "We've been having a ton of demand recently, especially since we've lifted [pandemic] restrictions, schools are back in session, and the traffic has been seen returning to pre-pandemic levels," said the market source. The situation is expected to resolve by April 9, as the cold front that hit the Gulf of Mexico has already affected a day's worth of operations, but the Americas clean tanker markets are already operating on a delicate scale. "I think this will last not a month, but maybe a few more weeks, it's just not sustainable for charterers," said a shipbroker, referring to charterer's resistance to keep freight at sky-high levels. Tonnage reduced from Europe A challenging gasoline arbitrage on the front-haul 37,000 mt UKC-USAC route is set to shorten available tonnage on the USGC further, decreasing the number of tankers usually ballasting to the USGC after discharging gasoline. Northwest European gasoline exports to the USAC are expected to fall sharply in the week to April 10, as high European flat prices are causing a buildup of unsold cargoes in the Amsterdam-Rotterdam-Antwerp trading hub for prompt delivery, market sources said. About 102,000 mt gasoline were expected to load in Northwest Europe for export to the USAC in the week started April 4, down 100,000 mt on the week, according to Kpler shipping data.
Apr 08 2022
War-torn Ukraine is increasingly reliant on fuel supplies via truck from Poland following the destruction of up to 20 major fuel depots, damage to its main refinery, and the cutting of Black Sea shipping routes, Ukrainian experts say. Russia's military assault on northern Ukraine has abated in recent days, but as the focus of military activity shifts to the east, the country faces increasingly stretched fuel supply, Serhiy Kuyun, head of the A-95 fuel consultancy, told S&P Global Commodity Insights. Ukraine has long been shifting away from Russian energy and previously took Azeri crude by sea for the Kremenchuk refinery and diesel from northern neighbor Belarus. It also hosts the Odesa-Brody pipeline from the Black Sea into Central Europe. But the Russian invasion meant cutting supplies from Belarus, which has supported Moscow, and Black Sea security risks and a Russian blockade have stopped shipments from Azerbaijan and Romania, the latter previously a source of fuel supply by sea. With crucial infrastructure now damaged and the geography of the Carpathian Mountains preventing supply from other neighbors, Ukraine is now largely dependent on Poland; the latter is in the process of merging its two main refineries under PKN Orlen, which also operates Lithuania's Mazeikiai. "The market has not stopped, but it has been forced to adapt," Kuyun commented in a statement. "There are no stocks of fuel anymore. We're selling as soon as fuel tanker truck arrives." In the course of March, Russia's navy targeted fuel depots across the country, including in Lviv, Lutsk, Ternopil, Rivne, Zhytomyr, Odesa, Poltava, Kyiv, Chernihiv, Kharkiv and Dnipro. Then on April 2 the 240,000 b/d Kremenchuk refinery was badly damaged in a Russian missile attack, putting it out of action, according to regional and company officials. Ukraine's second refinery, the Shebelinka Gas Processing Plant in the east of the country, was taken offline Feb. 26 due to the threat of shelling. Kuyun added that the stricken fuel depots were mostly full early in March, with later attacks coming when stores were already depleted. The country now faces not only a shortage of fuel, but a squeeze on trucks available for bringing in fuel, he said. "More fuel trucks are needed that can bring fuel directly from abroad," Kuyun said. "It is necessary that every owner of a fuel tanker truck has the opportunity to go and buy fuel." Ukraine's government is also liaising with state railroad company Ukrzaliznytsia to make sure supplies can also come by rail. Price liberalization Kuyun advised the government should cancel price controls and lift restrictions on maximum gasoline and diesel retail prices to encourage private traders to import more. "I know of three regional fuel chains that have already stopped selling fuel in the last two days because the cost is higher than the set prices," he said. "Even large players are forced to limit sales, because new batches of fuel arrive at the pump, but its cost is already beyond the established price corridor." The Ukrainian parliament on March 15 cancelled excise tax on all kinds of fuel and lowered VAT to 7% from 20% on imports of gasoline and diesel fuel. The lower taxes create an incentive for private fuel suppliers to arrange more supplies and help to reduce prices at retail stations. The government also ordered the state customs service to remove bureaucracy from customs clearing of fuel imports. Planting season While the turmoil of war and a flow of refugees out of the country will have impacted demand, the lack of refining capacity also poses a challenge for the vital grain sowing season — Ukraine being an important source for global grain markets. Ukraine is likely to reduce the area planted with grain crops by up to 30% because of fighting in eastern and southern regions, in turn reducing the demand for fuel, according to the government. In 2021, Ukraine imported 8.79 million mt of petroleum products, up 9.6% from 8.02 million mt in 2020, according to the state customs service.
Apr 08 2022
The Maritime and Port Authority of Singapore has taken steps to ensure the fuel contamination issue, which has so far impacted dozens of ships that bunkered at the city-state, does not escalate further as it continues its probe. MPA has contacted the relevant bunker suppliers to take necessary steps to stop supplying the particular batch of fuel, and also informed all ships that were supplied with the fuel to exercise caution, the regulator told S&P Global Commodity Insights April 7. MPA had launched an investigation to determine the cause of the latest off-specification bunker fuel issue after several cases of chlorinated hydrocarbons were detected in marine fuel deliveries, mostly for high sulfur fuel oil, in the world's largest bunkering port. "Further investigations are currently ongoing. MPA will not hesitate to take action should there be any non-compliance," it said. The recent bunker fuel quality issue in Singapore is a reminder of the Houston fuel quality problem that arose in 2018, when many ships consumed contaminated fuel and suffered engine damage before it was discovered that the fuel was unsafe to use. Valuations surge The global fuel oil market has been in a turmoil with limited product availability, largely attributable to less-than-usual Russian oil flowing into the marine fuel oil pool. Amid this, the Asian HSFO market has been caught in the eye of a storm as tight availability is further compounded by fuel quality issues in Singapore. This has meant that few suppliers were now in a position to offer product to the spot market. As such, offers have not only drawn down to a trickle, but even those with product were only able to commit delivery about 10 days out. The premium for Singapore-delivered 380 CST bunker over the Mean of Platts Singapore 380 CST HSFO assessment has progressively ticked higher in the recent days to hit a near two-year high of $35.97/mt on April 7. The differential was last higher at $39.78/mt on April 23, 2020, S&P Global data showed. Quality concerns Global fuel testing and inspection companies Veritas Petroleum Services and Maritec were among those to highlight their recent findings related to HSFO bunker fuel quality issues in Singapore. VPS said in a statement March 31 that through the course of February-March, it had identified 34 ships that received from two Singapore suppliers HSFO deliveries contaminated with up to 2,000 ppm of chlorinated hydrocarbons. The fuel even met the ISO8217 specifications upon each delivery, VPS said. "These bunker fuel contaminations have affected 14 vessels so far and the impact has been failure of the fuel system to the auxiliary engine resulting in loss of power and propulsion creating a blackout," VPS said. Fuel system failure arose from seizure of the fuel pumps and plunger and barrel corrosion, caused by the bunker fuel contaminants, it said, adding that these problems appear to be continuing to affect an increasing number of ships. Maritec said March 17 it had tested several samples representing HSFO deliveries in Singapore from March 4-13 and detected chlorinated organic compounds by GCMS test methods. Source of theses organic chlorides could be from chemical used in engine air coolers and cleaning agents used in the dry-cleaning industry, and should not be present in bunker fuels at this level, it added.
Mar 28 2022
In this week’s Market Movers Americas, presented by Marieke Alsguth: – Cold weather, storage outlook boost NYMEX gas (00:19) – Ontario building out its EV and battery industries (00:51) – Trans-Atlantic tanker rates surge amid Ukraine war (01:32) – Power and Gas M&A Symposium approaches (02:18)
Mar 28 2022
In this week’s Market Movers Americas, presented by Marieke Alsguth: – Cold weather, storage outlook boost NYMEX gas (00:19) – Ontario building out its EV and battery industries (00:51) – Trans-Atlantic tanker rates surge amid Ukraine war (01:32) – Power and Gas M&A Symposium approaches (02:18)
Mar 26 2022
Some further strengthening was seen over the course of the week for trans-Pacific premiums as many US-based importers continued booking cargoes to the US East Coast, rather than face the uncertainty of labor negotiations on the US West Coast.This has only served to fuel a currently worsening situation on the East Coast, with higher booking rates coming hand in hand with the unrelenting congestion at key USEC ports, headlined by Charleston with some 30 vessels waiting to birth.This is a situation likely to get worse in the short term as more booked cargoes begin to arrive, adding fuel to fire."The premium market is starting to pick up again, especially given the diversification away from the US West Coast at this point," said a US-based logistics provider. "The queues at US East Coast ports are starting to mount so it's becoming quite tricky to move goods."Rates to the US West Coast for premium bookings were heard as high as $16,000/FEU, while the US East Coast still maintained a premium. Rates were heard for spot bookings as high as $17,500/FEU, not far off the peak seen towards the end of 2021, when rates were resting in the $20,000/FEU range.As with other regions, the real issues in the market remain not with the ocean freight element, but with the inland logistics shortage. A lack of chassis and railcars are precluding importers to move their goods away from ports and towards inland distribution networks.Premium rates weren't only seen on the trans-Pacific however. The worsening situation at European ports with delayed cargoes has prompted some premiums to continue and even grow on trans-Atlantic routes."There are big delays in Europe at the moment so we are starting to see some premiums begin to come back for trans-Pacific," said a US-based freight forwarder. "Not big levels, but people paying up to move goods quickly otherwise they'll end up at the bottom of a growing stack."These premiums were heard in the $8,500/FEU region for North Europe-to-East Coast North America cargoes. Southeast Asia market eyes port disruptions The all-inclusive premium container rates were largely stable during the week ended March 25 as concerns of port disruptions, blank sailings and higher bunker fuel charges were partially offset by slower cargo movement in China, sources said.The average freight for Southeast Asia to North America was heard at $17,000-$18,000/FEU for East Coast and $15,000-$16,000/FEU for West Coast, unchanged from a week ago but some quotes were offered with steep monthly increases, sources said."I received a quote from NVOCC for Philippines to Ohio at $22,500/FEU. Last month, it was at $20,826/FEU," a US-based importer said.The current geopolitical circumstances further pose a threat to market stability and may lead to higher rates, the importer added."While major ports in South China have resumed operations, the shortage of truckers is a looming concern as the various tests and checks may deter them from coming to Shenzhen to pick up containers," a source based in Singapore said. "Shortage of truckers would again result in a shortage of empty boxes."The trucking service between Shenzhen and nearby cities may be impacted by 20% due to stricter road control and frequent Nucleic Acid Test, Danish carrier Maersk said earlier this week. "Consequently, there will be longer delivery times and a possible rise in transport costs such as detour fee and highway fee."Despite the terminals being operational, several carriers have been blanking sailings at major ports, leading to concerns of cargo backlog and long queues at ports, sources said.The FAK rates on the route, however, remained stable during the week.Platts Container Rate 25 -- Southeast Asia-to-East Coast North America -- was assessed at $10,500/FEU and PCR23 -- Southeast Asia-to-West Coast North America -- was assessed at $9,500/FEU March 25, both unchanged on the week.Prices on the short-haul India-Middle East route were assessed higher this week due to rising bunker fuel costs and growing uncertainty in the supply chain.PCR33 -- West Coast India to the Middle East -- was assessed at $2,300 FEU March 25, up $200 on the week. TCR33 -- West Coast India to the Middle East – was assessed at $1,050/TEU, against $1,000/TEU in the previous week."Prices have been fluctuating around different routes. For India to the Middle East they are gradually moving up as more and more BAF adjustments are being introduced. Just recently, a $300 GRI has been implemented on reefer containers on the route," a freight forwarder based in India said.
Mar 25 2022
Freight for the Aframax and Suezmax US Gulf Coast-Transatlantic runs rose w35 and w24, respectively, in the four consecutive trading sessions leading up to March 24, as major oil companies stepped into the fixing arena to cover third-decade March and first-decade loading US crude stems on the 70,000 mt and 145,000 mt USGC-Transatlantic runs, in order to substitute for self-sanctioned Russian Urals crude barrels. “I’d imagine increased EU demand as self-sanctioning takes Russian volume off the market,” said a charterer. “EU needing to seek alternatives, the question is where is it going to be sourced[?],” a shipbroker said. “Certain guys have been active taking all sizes of ships TA, so that’s a definite possibility.” Aframax and Suezmax USGC-UKC freight levels were last seen reaching w190 and w92.5, respectively, in April 2020, when the pandemic-related global lockdowns prompted steep contangoes on the oil markets and put over 200 million barrels of crude and products into floating storage, taking up roughly 5% of the global tanker fleet, data from S&P Global Commodity Insights showed. The Suezmax sector was the first to feel the impact on rates as majors BP, ExxonMobil and Shell were hunting for tonnage across all sectors, including two VLCCs. On March 22, BP placed both the Suezmaxes Evagoras and the Ottoman Courtesy on subjects for the 145,000-mt USGC-Transatlantic runs at w75, loading March 28-29 and April 5-6, respectively, when freight for the Aframax 70,000 mt USGC-Transatlantic voyages were indicated at w155-w160. Subsequently, the Aframax and Suezmax sectors appeared to be engaging in a head-to-head race, leading freight w35 and w11.5 higher on the day, respectively. Once w175 had been traded on the trans-Atlantic Aframax runs, Suezmax owners indicated early-April loading tonnage at between w82.5-w85, leading charters to book Aframax tonnage at w180 basis 70,000 mt. “It is active on the Afras right now for third decade ex USGC, and the Suezmaxes are not available to bail them out either,” a second shipbroker said March 22. “Suezmax relief comes in for early April dates, but not for end March.” The same day freight for the VLCC USGC-China run increased lump sum $350,000 to $5.4 million, when ship owners witnessed the run on USGC-UKCM tonnage across all segments, whereby the VLCCs Olympic Lyra and Cyan Nova were heard booked at $3.0 million and $3.15 million by BP and Shell, respectively, for mid-April laycans. “Afras continue to push higher on USG-TA, along with lack of Suezmaxes around to take the steam out, charterers are looking at freight solutions,” a charterer said, explaining the carryover to the VLCC tonnage, known to be the work horses on the long-haul USGC-East routes. “The crude market is roofing, you have massive demand but you have a buffer on the tankers and the true buffer is the availability on the VLCCs,” a shipowner said, explaining that the current fixing spree on the USGC-Transatlantic routes would ultimately come to the rescue for the VLCC market as well. Suezmaxes steal Aframax stems Charterers were hoping the Suezmaxes could aid in staving off the surging Aframax rates, but that proved to not be an option, when March 24 fixing activity clearly favored Suezmax tonnage over their smaller sisters driving USGC-TA freight up to w92.5 basis 145,000 mt and w190 basis 70,000 mt. BP placed the Maran Penelope on subjects for the 145,000-mt USGC-Transatlantic run at w90, loading April 6-9, before Resource covered an April 1-2 loading stem on the route at w92.5 and demurrage at $52,500/d. Towards the end of the Platts Market on Close assessment process from S&P Global Commodity Insights, BP repeated the last done w92.5 to cover an April 9-10 loading USGC-UK Continent/Mediterranean stem by booking the AST Sunshine with demurrage moving up to $53,000/d. Market participants all agreed that a further increase in rates for the 70,000 mt USGC-UKC/Mediterranean route will be seen, with active rate indications reaching the w190-w200 levels March 24. Yet some questioned whether rates were sustainable for laycans reaching beyond the first and second-decade April dates. FFA backwardation Some believed that the need for heightened crude exports to Europe would continue for some time as a result of the disruption in exports of Kazakhstan’s CPC crude grade from the Russian Black Sea port of Novorossiisk after storm damage to CPC offshore loading facilities and pipe damage at two of the three single-point mooring facilities. Activity on the 70,000-mt USGC-UKC Forward Freight Agreement, or FFA, market showed a w22 steep backwardation between the April 2022 and May 2022 contracts, reflective of the prompt tonnage demand. Trade focused on the May contract and extended past the end of the MOC process at 2:30 pm EST (1830 GMT), with 80 lots of 1,000 mt each traded at $25.646/mt or the equivalent value of w137. The balance month contract traded 20,000 mt at $32.5728/mt, or the equivalent value of w174, w15 above the April contract assessment at w159, data from S&P Global showed.