Singapore—The Asian fuel oil market expects supply from Western arbitraged cargoes to be tight March 29-April 2 as the arrival of April low sulfur fuel oil cargoes, especially on ships waiting to go through the Suez Canal, will likely be delayed. This has led the Singapore Marine Fuel 0.5%S April-May swap to flip back to backwardation, according to market participants.
Meanwhile, demand for high sulfur fuel oil from South Asia continues to rise, as power generation and industrial demand increases, with India and Pakistan each securing a spot cargo via tender for the first half of April, according to traders.MARINE FUEL 0.5% SULFUR**The Singapore Marine Fuel 0.5%S April-May backwardation March 29 was stable at $1.25/mt from the March 26 Asian close assessment as bids were at parity against offers at $2/mt, data from the Intercontinental Exchange and brokers showed.
**Owing to the delay at the Suez Canal, traders expect the arrival of low sulfur fuel oil arbitrage cargoes from the West to slip beyond their original delivery laycans of H2 April, possibly to May, depending on how long it takes to fix the problem, market sources said.
**As a result of anticipated delays, coupled with news of the attack on storage tanks at Jizan refinery in Saudi Arabia on March 25, the Singapore Marine Fuel 0.5%S April-May swap rebounded to a backwardation of $1.25/mt on March 26, after it slipped to a contango of 20 cents/mt on March 24.
**Fuel oil traders, however, said Singapore's current stocks are sufficient to meet demand. In addition to 3.5 million mt of stocks in landed terminals, there are about 2.5 million-3 million mt of stocks of low sulfur fuel oil sitting in floating storage around Singapore, market sources said. This will give enough supply to Singapore's bunker market, which typically sees about 3 million mt/month of low sulfur bunker demand.
**In the North Asian bunker market, spot offers for bunker fuel against enquiries at Japan's Tokyo Bay are expected to become more readily available as berth maintenance at ENEOS' Negishi refinery will complete on March 31.
**The Tokyo Bay marine fuel 0.5%S premium against FOB Singapore marine fuel 0.5%S cargo should also soften as a result, having run up $4.55/mt week on week to $35.02/mt on March 26, Platts data showed.
**Meanwhile, high inventories at Zhoushan, coupled with tepid demand, is expected to weigh on bunker fuel premiums in the week of March 29-April 2, as suppliers compete to secure orders.
**The Zhoushan delivered marine fuel 0.5%S premium against FOB Singapore marine fuel 0.5%S cargo assessments was down $4.45/mt week on week to $16.02/mt on March 26, Platts data showed.
HIGH SULFUR FUEL OIL**According to brokers' indications and ICE data, morning discussions for the Singapore 380 CST high sulfur fuel oil April/May spread opened March 29 at $2.25/mt, lower than the March 26 assessment of $2.45/mt.
**High sulfur fuel oil demand from power plants in Bangladesh is expected to rise in April, gaining momentum as temperatures in the subcontinent rise, with HSFO imports likely to reach around 400,000 mt, from 350,000 mt in March.
**Demand for straight-run fuel oil as refinery feedstock is also increasing, refinery sources said, as "still competitive prices make it an attractive alternative to other feedstocks."
**In the downstream North Asian market, the arrival of more HSFO cargoes in Hong Kong is expected to contribute to an increase in selling pressure at the port in April, according to bunker suppliers there.
** In line with expectations, the Hong Kong delivered 380 CST high sulfur bunker fuel premium to the FOB Singapore HSFO cargo assessment dropped $1.92/mt week on week to $19.03/mt on March 26, Platts data showed.
