Bunker sales at the UAE’s Port of Fujairah, the world’s third largest bunker hub, are being capped amid a surge in demand and a lack of available barges to fuel up vessels, according to bunker traders at the port.
Fujairah bunker sales in June fell to a three-month low as marine fuel prices have been climbing for several months at both Fujairah and Singapore, the world’s largest bunkering hub. The premium for Fujairah-delivered marine fuel against FOB Singapore is firming up as the market faces a slight shortage of bunker barges amid stronger expected demand in Q3, traders told S&P Global Platts.
“This market has been on considerable rebound as of late,” a Fujairah-based bunker supplier said.
The rebound is welcome after bunker suppliers at Fujairah were beset by weak premiums that eroded margins. In June, Fujairah’s bunker sales were 671,857 cu m, the lowest since March, according to Fujairah Oil Industry Zoe data.
According to traders polled by Platts, between 30 and 40 barges are available at Fujairah for bunker delivery. The active barge count is down by at least three barges from last year due to weak premiums, the traders said. “The thin premiums for delivered marine fuel 0.5%S were quite inadequate to cover operational cost,” a Fujairah-based bunker supplier said.
Higher premium
The bunker supplier said that prompt delivery of two to three days ahead would command an additional premium of $2/mt on top of valuations basis delivery lead time of five days due to the tight barge availability. Platts assesses delivered bunker fuel prices reflecting delivery five to 10 days forward from the date of publication.
Prices of 0.5% sulfur fuel oil at both Fujairah and Singapore are trading close to levels of early 2020 when the International Marine Organization imposed sulfur limits on marine fuel as of Jan. 1, 2020.
According to Platts data on July 26, Fujairah-delivered 0.5%S marine fuel is selling at a premium to FOB Singapore 0.5%S while the delivered grade is selling at a $9.50/mt discount to Singapore-delivered 0.5%S marine fuel.
Because of the Eid holiday last week, bunker demand at Fujairah slowed but is expected to pick up, traders said. Platts assessed the Fujairah-delivered marine fuel 0.5% bunker price at $525/mt on July 26, against $534.50/mt in Singapore. The resulting $9.50/mt spread was the widest since Feb. 17, according to Platts data.
According to Platts data, the premium for Fujairah-delivered marine fuel 0.5%S against FOB Singapore 0.5%S averaged $2.69/mt during the week ended July 23, up 74 cents/mt from the previous week and higher than the June average of $1.65/mt. The premium was $2.08/mt on July 26, up from $1.32/mt on July 23.
Source: Platts