Hong Kong bunker fuel market seen underpinned in Dec by firm demand, tight supply
The Hong Kong bunker fuel market is likely to be supported in December on firm demand and tight supply, traders said Tuesday, with the market maintaining the upward momentum that started in earnest in November.
S&P Global Platts reported on November 22 that pre-nomination volumes from term customers for the month had been unexpectedly strong, which worked to siphon off available volumes from the spot market. This, together with firm spot demand, resulted in bunker fuel volumes selling out quickly in November.
“Demand has been pretty robust since November and for December, we are still seeing good demand due to tightness in Singapore and South Korea so some demand from there has shifted to Hong Kong,” a Hong Kong-based trader said Tuesday.
“Also, even at current levels, [bunker] prices in Hong Kong are cheaper than that available in the US [west coast] so people are still willing to take bunkers in the Far East Asia side,” he said.Another trader agreed, saying firm demand has helped underpin the market.
“The Hong Kong market is very tight now and it’s due to a combination of factors such as higher demand volumes from vessels as some ports in Northern Asia are frozen over or experiencing rough seas, so there are more vessels calling at Hong Kong,” he said, adding that while this was a seasonal occurrence, the situation has been further compounded by tight supply.
“There’s tightness in Singapore now, and cargo delays into Hong Kong, so together with firm demand, the [Hong Kong] market is very tight,” he said.
While it was heard that replenishment cargoes for one Hong Kong-based supplier would be arriving on December 10 or 11, traders said the upward momentum for the Hong Kong bunker market would likely only ease sometime in January.
“There are some companies who will want to keep low inventory levels for their year-end financial reporting so there are less supplies coming in as well…. we have been advised to take all our loadings before Christmas, so once we sell out, it’s a ‘close-shop’ situation for us,” a trader said Tuesday.
Still, other sources said it was heard some suppliers would still be receiving cargo shipments in the middle of December, and there should be adequate volumes left over for the spot market.
Industry sources said Tuesday the 80,000 mt Pacific Sunrise was seen chartered for a Singapore-Hong Kong route, with the fuel oil laden vessel to load on December 9 with an estimated arrival date of December 18 in Hong Kong.
“On the supply side, it’s OK for some although we’ve heard others are experiencing some tightness in cargo,” a trader said Tuesday.
“Offer prices for bunker fuel for delivery before December 10 is high, at around $350/mt, but after that, offer prices are hovering around the $340s range,” he said, in reference to market sentiment reflecting a slight easing in prices once replenishment cargoes arrive on December 10.
Traders Tuesday broadly welcomed the surge in demand seen over the past few weeks.
“Demand in November and December has been better than we expected — the industry has been in bad times, so hopefully the good demand will persist till January at least because usually in the month after the Lunar New Year, the market tends to be deathly quiet,” a trader said Tuesday.
Still, other traders remained cautious about being too bullish on the short-term outlook.
“Fuel oil arrivals into Singapore for December is looking higher than that of November, so if some of these charterers choose to push some of the barrels towards Hong Kong, January might not be tight for Hong Kong,” he said.
In its latest quarterly report released on September 29, data from the the Hong Kong Census and Statistics Department showed that Singapore was the leading source of fuel oil cargoes flowing into Hong Kong.
For Q2, 2016, fuel oil cargoes from Singapore accounted for 83.2% of imports into Hong Kong, with Japan in second place at 6.1% and China at 6%. South Korea was in fourth place, at 4.7%.
At the Asian close Tuesday, 380 CST delivered bunker fuel for Hong Kong was assessed at $339.50/mt. While the price was down $5.50/mt from Monday, it still maintained the 17-month high it had reached on Monday. S&P Global Platts data showed that the grade was last assessed higher on July 3, 2015, at $341.50/mt.
The Hong Kong bunker fuel market is likely to be supported in December on firm demand and tight supply, traders said Tuesday, with the market maintaining the upward momentum that started in earnest in November.
S&P Global Platts reported on November 22 that pre-nomination volumes from term customers for the month had been unexpectedly strong, which worked to siphon off available volumes from the spot market. This, together with firm spot demand, resulted in bunker fuel volumes selling out quickly in November.
“Demand has been pretty robust since November and for December, we are still seeing good demand due to tightness in Singapore and South Korea so some demand from there has shifted to Hong Kong,” a Hong Kong-based trader said Tuesday.
“Also, even at current levels, [bunker] prices in Hong Kong are cheaper than that available in the US [west coast] so people are still willing to take bunkers in the Far East Asia side,” he said.Another trader agreed, saying firm demand has helped underpin the market.
“The Hong Kong market is very tight now and it’s due to a combination of factors such as higher demand volumes from vessels as some ports in Northern Asia are frozen over or experiencing rough seas, so there are more vessels calling at Hong Kong,” he said, adding that while this was a seasonal occurrence, the situation has been further compounded by tight supply.
“There’s tightness in Singapore now, and cargo delays into Hong Kong, so together with firm demand, the [Hong Kong] market is very tight,” he said.
While it was heard that replenishment cargoes for one Hong Kong-based supplier would be arriving on December 10 or 11, traders said the upward momentum for the Hong Kong bunker market would likely only ease sometime in January.
“There are some companies who will want to keep low inventory levels for their year-end financial reporting so there are less supplies coming in as well…. we have been advised to take all our loadings before Christmas, so once we sell out, it’s a ‘close-shop’ situation for us,” a trader said Tuesday.
Still, other sources said it was heard some suppliers would still be receiving cargo shipments in the middle of December, and there should be adequate volumes left over for the spot market.
Industry sources said Tuesday the 80,000 mt Pacific Sunrise was seen chartered for a Singapore-Hong Kong route, with the fuel oil laden vessel to load on December 9 with an estimated arrival date of December 18 in Hong Kong.
“On the supply side, it’s OK for some although we’ve heard others are experiencing some tightness in cargo,” a trader said Tuesday.
“Offer prices for bunker fuel for delivery before December 10 is high, at around $350/mt, but after that, offer prices are hovering around the $340s range,” he said, in reference to market sentiment reflecting a slight easing in prices once replenishment cargoes arrive on December 10.
Traders Tuesday broadly welcomed the surge in demand seen over the past few weeks.
“Demand in November and December has been better than we expected — the industry has been in bad times, so hopefully the good demand will persist till January at least because usually in the month after the Lunar New Year, the market tends to be deathly quiet,” a trader said Tuesday.
Still, other traders remained cautious about being too bullish on the short-term outlook.
“Fuel oil arrivals into Singapore for December is looking higher than that of November, so if some of these charterers choose to push some of the barrels towards Hong Kong, January might not be tight for Hong Kong,” he said.
In its latest quarterly report released on September 29, data from the the Hong Kong Census and Statistics Department showed that Singapore was the leading source of fuel oil cargoes flowing into Hong Kong.
For Q2, 2016, fuel oil cargoes from Singapore accounted for 83.2% of imports into Hong Kong, with Japan in second place at 6.1% and China at 6%. South Korea was in fourth place, at 4.7%.
At the Asian close Tuesday, 380 CST delivered bunker fuel for Hong Kong was assessed at $339.50/mt. While the price was down $5.50/mt from Monday, it still maintained the 17-month high it had reached on Monday. S&P Global Platts data showed that the grade was last assessed higher on July 3, 2015, at $341.50/mt.