The cash discount on Asia’s 180-cst fuel oil grade narrowed to its smallest in two weeks,pulled in by tight supplies, traders said.
The 180-cst discount stood at $2.42 a tonne to Singapore spot quotes on Tuesday, narrowing by more than 30 percent or $1.08 a tonne to Singapore quotes from Friday, Reuters data showed.
Only around 2.7 million tonnes of fuel oil from the West, which includes Europe and the United States, will arrive in Asia in August. Refinery maintenance and high freight rates have hampered the flow of cargoes, which are typically more than 3 million tonnes a month.
Some traders regarded 180-cst weakening earlier as unreflective of market fundamentals and going forward, the market would be tight overall, particularly on the 380-cst grade.
The 180-cst fuel oil can be used to blend heavier fuel oil into the RMG grade, a common industry term referring to the 380-cst grade.
“Demand has improved compared to the last few weeks and the outlook on the supply of oil for the next few months would be similar (continue to be tight),” said a Singapore-based trader.
He added that he had not seen many vessels chartered to ship fuel oil from the West to the East.
In other news, South Korea’s East-West Power Co Ltd (EWP) has bought 50,000 tonnes of high sulphur fuel oil for August 16-20 arrival into Ulsan at a premium of $23.69 a tonne to Singapore spot quotes, a source from the utility said on Tuesday. The seller was Hyundai Corp.
EWP last bought a similar cargo for delivery into Ulsan over July 27-31 from trading house Mercuria, at a premium of $25 a tonne to Singapore spot quotes, just 6 percent higher than the latest trade.
There was no cash trading on Monday due to a public holiday in Singapore.
SINGAPORE CASH DEALS
There were three 180-cst deals, with Glencore and BP the seller and buyer, respectively.
The three cargoes were each 20,000 tonnes, two of which were concluded at $600 a tonne for Aug. 20-24 and Aug. 24-28 loading. The final cargo for loading over Aug. 15-19 was done at $601 a tonne.
Source: Reuters (Reporting by Jane Xie; editing by Keiron Henderson)
