Strong finished spec fuel oil supply hits ARA HSFO barge prices

Lifestyle

Rising supply of finished specification RMG grade fuel oil has been dragging HSFO barge prices lower for the last two weeks, with the front-month barge swap weakening to a $2.75/mt discount to the second-month swap — a five-week low.

“There are lot of products being offered in the market for finished spec, there are many suppliers in the market who want us to load, especially front-end,” said a Northwest European trader.

A second trader in the region added: “Finished grade suppliers want to empty out tanks, to make space for increasing shipments from Russia.”

Additionally, an increase in M100 shipments arriving in Rotterdam have also added to the increasing availability, according to Platts sources. M100 is typically the largest component used to blend up to RMG specification, along with slurry and light cycle oil.

The discount of 3.5% FOB Rotterdam cash barges against the front-month barge swap has also fallen sharply since highs of plus 50 cents/mt at the end of May, hitting a four-week low of $3.25/mt late last week.

Demand for finished specification bunker fuel has remained stable amid “lackluster shipping demand,” according to traders.

Stock levels in the Amsterdam-Rotterdam-Antwerp region have averaged around just below 7 million barrels since April, when five VLCCs were fixed for the arbitrage east.

Typically, stock levels will decline in large quantities on the back of VLCC loadings, as almost 2 million barrels can be loaded out of inventories in one go.

One VLCC has been fixed by Vitol loaded June 8 and is currently heading to Singapore, according to Platts trade flow software cFlow, but no more VLCCs have been booked for June.

“Vitol was heard buying around 300 kt for a VLCC they had heading to Singapore, but other than that [there’s] nothing more,” the first trader said.

Vitol could not be reached for comment.

Source: Hellenic Shipping news