Low sulfur fuel oil (LSFO) imports to Singapore in November are expected to decrease to around 1.3 to 1.5 million tons. This is down from approximately 1.6 to 1.7 million tons in October. Business sources in Singapore have reported that high shipping rates have closed off business opportunities, even though the price difference between Singapore and Rotterdam has reached its highest level.
High Shipping Rates and Their Impact on the Market
Traders in Singapore noted that LSFO imports in November are lower compared to October. One trader based in Singapore stated, "High shipping rates have made it difficult to take advantage of business opportunities from Europe, especially for large vessels. Additionally, imports from Brazil have also decreased and some oils are being sent to Fujairah."
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According to assessments, the difference between Singapore's 0.5%S marine fuel and Rotterdam's 0.5%S barges reached $192 per ton on October 28, up from $172 on October 27. This difference has increased by 16.5% in the past two weeks and is currently at its highest level since tracking began in April 2022.
Limited Supply and Its Impact on the Market
Singapore has faced shortages of very low sulfur fuel blend components in recent months. Traders believe that the closure of business opportunities from Europe will also limit the flow of medium sulfur fuel components, further pressuring the marine fuel market.
Another trader based in Singapore predicted that most imports will be concentrated in the first half of November, with supply tightening in the second half of the month. He added, "Even though shipping rates are very high, some traders have already locked in contracts for delivery in November. So far, no cancellations have been observed. Overall, November will not see a significant change, but there may be some reductions."
In European markets, participants reported a decrease in fuel oil contracts heading east due to high dirty vessel rates. One European trader said, "All business opportunities have been closed off." However, some volumes are still moving, and traders are increasingly favoring smaller vessels.
Another source stated that given current shipping costs, "an MR vessel is more attractive, and you can save between $10 to $15 per ton compared to a Suezmax vessel."
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