Conventional bunker prices in Singapore trended down in April as sellers kept prices competitive to secure deals amid weaker downstream demand and prolonged backwardation.
Average prices for very-low sulphur fuel oil (VLSFO) in April stood at $746.98/t delivered on board (dob), up by 52pc on the year, but down by almost 16pc from March when prices surged because of concerns of supply disruptions stemming from the US-Iran war.
Steep backwardation in the VLSFO cargo market slowed trade in the downstream market, triggering a more aggressive sell-off by some physical suppliers in late March, when Singapore bunker trades surfaced at a discount to cargo prices. Backwardation for May-June narrowed to $15/t on 21 April — compared to record highs in the week of 13 March when the March-April spread widened to $100-130/t — but many sellers were still keen to offload inventories given weak demand in the retail bunker market.
April VLSFO bunker prices in Singapore remained competitive as many buyers delayed trading because of elevated prices within the energy complex, and delivered VLSFO prices flipped to a discount of around $3/t against cargo again on 23 April. But blendstock components for VLSFO continues to be tight, which may provide some support for VLSFO prices if the shortage persists through May.
Meanwhile, average prices for high-sulphur fuel oil (HSFO) rose by 55pc year on year to $665.11/t dob after Iran's blockade of the strait of Hormuz restricted flows to Asia Pacific, but prices have corrected downwards by 10pc month on month. Middle East HSFO volumes make up around 40pc of Singapore's monthly imports, but bunker participants noted that delivered supplies remain ample from earlier inventories and floating storages around the region. More HSFO arbitrage flows have also been diverted from Colombia, Mexico and Venezuela to Singapore, and many buyers preferred waiting on the sidelines for clearer price signals if bunkering schedules were not urgent.
Likewise, the war in the Middle East amplified concerns of a supply crunch for low-sulphur marine gasoil (LSMGO) in Singapore, and average April prices more than doubled on the year to $1,481.65/t dob. But LSMGO prices fell by 10pc from average March prices, given that panic surrounding LSMGO supply tightness within Asia eased, and sellers lowered offer levels to entice buying interest. Singapore LSMGO prices flipped to a discount of around $29/t against Zhoushan LSMGO prices on 8 April, and the discount against the Zhoushan equivalent price widened further to around $56/t on 30 April. But a supplier noted that spot demand for LSMGO in April had been weak, given that some vessel owners preferred bunkering at Chinese ports given competitive fuel oil prices.
