Tight VLSFO supplies see ships swerve past Singapore

Tight VLSFO supplies see ships swerve past Singapore
For the first time in nearly two months, crude oil prices have fallen below $100 a barrel this week, yet in Singapore the price gap between high and low sulphur fuel oil – known as the Hi5 – remains at record highs, nudging towards $600 per tonne with ships in the region increasingly swerving away to other bunkering destinations.
The pricing gap between Singapore and Rotterdam, the worlds two largest bunkering hubs, is stark. “VLSFO supply has been acutely tight for weeks in Singapores bunker market, with high price premiums quoted for prompt delivery dates,” a new report from bunker platform Engine states, adding: “Sources in Singapore`s bunker market point to a lack of incoming VLSFO cargo flows as a reason for the grade being tight.”
The situation is expected to remain tight throughout July with reports emerging of ships avoiding Singapore for bunker operations, something that could increase on quality concerns. Global testing firm Intertek Lintec on Tuesday issued an alert regarding flash points below the ISO 8217 minimum requirement of 60°C found in VLSFO bunker samples from vessels that have taken fuel in Singapore, the latest in a series of damaging bunker quality incidents hitting the republic this year.
“It is the nature of the product and the inter-relationships with high priced transport fuels that is driving VLSFO prices so high, especially in Singapore. The eastern position is stronger than the western part, diesel and gasoline exports from India and China are very low, and supply is severely restricted in the eastern part of Suez, “emphasized a recent Integr8 Fuels report.
This year, the widening price gap between the two major transportation fuels has increased new interest in scrubbers. Looking at the
VLCC segment, Norwegian broker Fearnleys said in his latest weekly report: According to Fearnleys, sulfur fuel oil earns about $ 27,000 a day on a trip from the Middle East to China. However, for non-eco-ships on the same voyage without scrubbers, TCE returns still struggle at the break-even point.