Singapore 3.5% bunker sales rise as diesel costs force marine fuel prices up

LONDON, (Quantum Commodity Intelligence) – Bunker sales from the Asian hub of Singapore rose marginally in April compared to a month earlier, driven by sales of high sulfur fuel oil as lower-sulfur, diesel-based marine fuel costs rose sharply.

The figures showed that sales of 3.5%-sulfur fuel oil rose 10%, albeit from a relatively low base, to 1.1 million mt last month and almost 50% on the same point last year.

It accounted for more than 25% of all sales versus just 19% in the same month a year earlier.

At the same time, marine fuel oil sales with a 0.5% sulfur content, were broadly unchanged in April at 2.81 million mt, down 20,000 mt on the month and 40,000 mt on the year.

The rise in share of 3.5% fuel oil comes as the cost of marine fuel rose steadily relative to over the course of the month, with the spot Singapore premium for 0.5% versus 3.5% climbing from $101.50/mt on April 1 to $111.25/mt by the end of the month.

IMO 2020 mandated bunker fuel for ships at a maximum of 0.5%-sulfur, compared to 3.5%-sulfur, but increasingly vessels are being fitted with 'scrubber' that allows for on-board de-sulfurization. 

A rise in air travel, coupled with lower run rates at diesel exporter India, pushed diesel cracks steadily higher in April and underpinned the rise in the cost of marine fuel - which is estimated to be 70-80% comprised of diesel.