HSFO east-west spread falls to four-month low

Quantum Commodity Intelligence - The spot east-west spread for cargoes of 380 CST high sulfur fuel oil slipped to fresh four-month lows at the start of the week as strong supply in Asia has meant cargo prices falling faster than in Europe.

The spot spread, which measures September cargoes of 380 CST HSFO in Singapore against October barges in ARA, was down another $4.25/mt from Friday during Asian hours to $18.50/mt, according to Quantum data.

It is the deepest discount in the spread seen in Quantum data since the end of May, as a spike in low sulfur marine fuel prices in Singapore due to a distillate shortage left demand for higher sulfur fuels drying up as buyers stepped away from the market.

The latest move comes as Russian flows continue to make their way to Asia, with north European importers particularly averse to being seen to do business with Moscow ahead of an incoming EU ban on crude and products imports.

The decline was not helped by a pause in trading in China on Monday, with the mid-Autumn festival said by brokers to be weighing on market liquidity.

Deferred positions largely saw the spread between the two locations narrow on Monday, although Asian HSFO cargoes remain firmly at a discount to European barges and are also trading at or near four-month lows.

The M1 spread – measuring October cargoes in Singapore against November barges in ARA – was up $0.50/mt to -$20/mt, with M2 up similarly to -$19.50/mt, and M3 up $0.75/mt at -$18.50/mt.