South Korean refiners are aiming to achieve higher premiums of more than $20/mt for bunker fuel term contracts for January loading cargoes, citing short supply of high sulfur fuel oil, industry sources said late Thursday.
"I expect to settle my January delivered term contracts for [380 CST and 180 CST high sulfur] at above $20/mt, as my company will not have much supply in January," a GS Caltex trader said.
The term premiums for December-loading 380 CST and 180 CST bunker fuel were settled between South Korean producers and their domestic customers at $18-20/mt to Mean of Platts Singapore 380 CST and 180 CST fuel oil cargo assessments.
Platts reported on December 3 that South Korean refiners plan to supply 640,000 mt of bunker fuel in December, down nearly 10% from 710,000 mt in November.
The tighter supply to the bunker market is partly attributed to increased fuel oil demand by power companies for the fourth quarter of this year and first quarter of next year, as utilities typically boost fuel oil consumption during winter. For example, Korea East-West Power Company issued a tender for the first time since August, to buy 30,000-80,000 mt of medium sulfur fuel oil for December 27-January 6 delivery.
Meanwhile, fuel oil prices in Singapore are likely to remain high as fewer cargoes are expected to make their way to the East, because of higher demand from the US on the back of colder weather.
Arbitrage supplies from the West to Singapore in January could be around 3.5 million mt, but sources said that the volume could be lower than the estimated figure.
"I expect to settle my January delivered term contracts for [380 CST and 180 CST high sulfur] at above $20/mt, as my company will not have much supply in January," a GS Caltex trader said.
The term premiums for December-loading 380 CST and 180 CST bunker fuel were settled between South Korean producers and their domestic customers at $18-20/mt to Mean of Platts Singapore 380 CST and 180 CST fuel oil cargo assessments.
Platts reported on December 3 that South Korean refiners plan to supply 640,000 mt of bunker fuel in December, down nearly 10% from 710,000 mt in November.
The tighter supply to the bunker market is partly attributed to increased fuel oil demand by power companies for the fourth quarter of this year and first quarter of next year, as utilities typically boost fuel oil consumption during winter. For example, Korea East-West Power Company issued a tender for the first time since August, to buy 30,000-80,000 mt of medium sulfur fuel oil for December 27-January 6 delivery.
Meanwhile, fuel oil prices in Singapore are likely to remain high as fewer cargoes are expected to make their way to the East, because of higher demand from the US on the back of colder weather.
Arbitrage supplies from the West to Singapore in January could be around 3.5 million mt, but sources said that the volume could be lower than the estimated figure.
