East of Suez Market Update 26 Oct

Prices across East of Suez ports are mixed, with all grades lower in Zhoushan, where bunker operations remain suspended due to Typhoon Champi.

IMAGE: Aerial view Zhoushan City, Zhejiang Province. Getty Images

Changes on the day to 17.00 SGT (09.00 GMT) today from Friday:

• VLSFO prices up in Singapore ($15/mt), and down in Zhoushan ($24/mt) and Fujairah ($5/mt)
• LSMGO prices up in Fujairah ($26/mt), Singapore ($10/mt), and down in Zhoushan ($30/mt)
• HSFO prices up in Singapore ($17/mt), and down in Fujairah ($30/mt) and Zhoushan ($18/mt)
• B30-VLSFO prices up in Singapore ($1/mt)

Zhoushan’s VLSFO price has dropped by $24/mt over the weekend, the steepest move among the three major Asian bunker ports. The price now stands at a $32/mt discount to Fujairah and a $13/mt discount to Singapore.

Consequently, Zhoushan’s Hi5 spread has narrowed from $90/mt to $84/mt, staying above Singapore’s $60/mt and below Fujairah’s $232/mt.

Zhoushan’s average daily VLSFO price so far this month is $940/mt, up from $897/mt in September and $483/mt in October last year. LSMGO has averaged $1,411/mt against $1,405/mt in September and $682/mt a year ago.

Availability of VLSFO and HSFO in Zhoushan remains tight despite low demand, as several suppliers report low inventories and lower imports, a source said. VLSFO lead times have shortened to eight days from 12 days last week, while HSFO lead times are unchanged at 12 days. LSMGO availability has improved, with lead times down to around four days from 12 days last week.

Bunker operations across Zhoushan have been completely suspended since last week because of rough weather caused by Typhoon Champi, the source said. Operations could resume on 28 October, when the weather is expected to improve.

Brent

The front-month ICE Brent contract has risen by $0.75/bbl on the day from Friday, to trade at $114.48/bbl at 17.00 SGT (09.00 GMT) today.

Upward pressure:

Brent crude’s price has extended gains as mounting concerns over supply disruptions in the Middle East have kept the market on edge.

Market participants are growing increasingly concerned about the risk of a fresh escalation in tensions between the US and Iran as Washington prepares for the mid-term elections on 3 November.

“Reports suggest President Trump is considering fresh strikes on Iran, while the US is reinforcing its military presence in the region with the deployment of a second aircraft carrier,” two analysts from ING Bank noted.

Saudi Arabia’s state-owned oil company Aramco has urged its staff to evacuate its headquarters in Dhahran, as the conflict between Riyadh and Yemen-based Houthi militant group intensified last week.

Downward pressure:

Brent’s gains have been capped by some hopes of easing hostilities in the Middle East.

Qatari mediators travelled to Tehran yesterday in an effort to de-escalate tensions between the US and Iran, Reuters reported, citing an official briefed on the situation.

Senior officials from Saudi Arabia, Turkey and Pakistan are also set to meet leaders in Tehran today, according to Reuters.

By Tuhin Roy and Aparupa Mazumder

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