Singapore
Trading activity was muted due to supply shortages. The price remains around $265-275 for bulk cargoes on a fob basis. Cargoes on trucks bound for Malaysia were still just below $240. One of the big refiners was said to be selling to Vietnam for $260 for bulk on a fob basis. Other regional players indicated that prices had been heard as low as $250 for bulk on a fob basis. Indonesia, Australia and New Zealand were said to offer an outlet for volumes as the China and Malaysian markets remained oversupplied. Players here reported a further easing in the shipping market.
High-sulphur fuel oil prices rebounded after global crude oil futures rallied. But gains failed to match sharper gains on Nymex crude futures, which moved up to $63/bl on electronic trade with technical buying support. Another sharp fall in fuel oil stocks in Singapore during the week provided momentum to improving sentiment. Singapore stocks fell by 1.3mn bl from the previous week to 10.88mn bl, a 16-week low. Fewer arbitrage shipments in late October and November lent support to sentiment, although the contango market is supporting floating storage offshore Singapore — where traders estimate that five or six tankers loaded with nearly 1mn t of HSFO could be sold when prices rebound.
Malaysia
Consumers are still awaiting government allocation of construction funding, so demand remains subdued. One big buyer was offered the same price this week from Petronas at 975 ringgit, while Shell offered 985 ringgit and ExxonMobil 990 ringgit, on a delivered basis to Kuala Lumpur.
Thailand
Regional participants reported poor availability from Thailand, and prices were still tracking Singapore.
Indonesia
Reports indicate that Indonesian buyers are looking beyond Singapore as supply tightens. Demand remains strong, and although Pertamina’s production is now said to be normal, the price of its bulk cargoes is about $350 on a delivered basis, leaving plenty of room for other suppliers. The supply difficulties in Singapore mean that Taiwan cargoes have become an option, according to one Indonesian participant.
Taiwan
China’s lack of demand is hurting suppliers, although there is a determination to keep prices steady at $275-280 on a fob basis. But one industry insider said CPC is talking with traders who are asking for the price to be reduced by more than $20. There is an expectation that CPC could drop the price next week. Little volume is moving between Taiwan and China, although there are rumours of a big deal done for delivery between now and January. Suppliers are looking to alternative markets, with some hope that Indonesia and Vietnam could provide relief.
South Korea
Completing spot deals to China is tough in the current climate, and even long-term contract prices are being renegotiated as the effect of the market slump takes its toll. Spot prices have been slashed to $260 on a fob basis. Official figures for August were released showing a 9.1pc increase in production on this time last year to 298,000t. Between January and August, ouput was 2.193mn t compared with 1.902mn t last year, a 15.3pc rise. Exports in August were also up to 149,000t, a 5.5pc increase on last year. January to August exports totalled 1.17mn t, a 22.3pc rise.
China
Demand remains weak and supply strong, with players keen to rid themselves of inventories before the price falls lower. But participants describe a struggle over what demand there is, and there is a sense that the market has tilted in favour of buyers. The approach of winter in the north is set to exacerbate the problem as excess supply will be pushed south as the paving season comes to an end. Already there are signs that the heavy buying of last winter is unlikely to occur this year, as inventories are already high.
Refineries maintained lower posted prices, although there were not the dramatic falls of previous weeks. In Shandong province, east China, posted prices were Yn2,600-2,800 ($329-354) for standard grades. At Luoyang refinery in Henan province, posted prices were steady at Yn3,130-3,050 for AH 90 and AH 100 respectively. But real deals could be done for a discount of Yn450. Gaofu refinery in Guangdong posted a price of Yn3,100, but real deals were done at Yn2,800. An official from Gaofu was expecting supply to increase as the winter approaches and northern demand dries up.
Despite the posted prices not changing dramatically, it seems that product was available at significant discounts. One market player reported being offered 10,000t at Yn2,200 from a refinery in Zhejiang province, although posted prices were nearer Yn2,800. No deal was done due to lack of storage.
India
Demand has started to rise as the monsoon begins to fade, as India gears up for the large east-west and north-south corridor highway projects. But the monsoon remains intense in the east of India, in West Bengal and Bihar states.
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