• Singapore’s HSFO sales in August robust • Sri Lanka, India ports ramp up HSFO supply • Scrubbers crucial to meet 2030 milestone: Platts Analytics
By Surabhi Sahu
Senior Editor, Refined S&P Global Platts
Contrary to initial expectations, Asia’s high-sulfur fuel oil market is witnessing a resurgence in demand, with many smaller ports and bunker players starting to offer the grade given amid a favourable Hi-5 spread that has lured shipowners to install scrubbers.
This ongoing thirst for HSFO comes despite a big push toward cleaner fuels following the International Maritime Organization’s global sulfur mandate and its impending rules relating to decarbonization.
In Singapore, the world’s largest bunkering port, HSFO bunker sales, which includes 180 CST, 380 CST and 500 CST grades, were mostly steady on the month in July but were up almost 7% year on year to 1.06 million mt, contributing for about 26% to total marine fuel sales, data from the Maritime and Port Authority of Singapore showed. Singapore’s HSFO sales over January-July jumped 33.7% on year.
“We are seeing a pick-up in inquiries from shipowners for HSFO bunkering at Singapore as there is tight availability at Fujairah, coupled with competitive delivered HSFO pricing at Singapore,” a Singapore-based trader said.
The discount for Singapore-delivered 380 CST HSFO to that of Fujairah widened from the July average of $6.82/mt to minus $15.83/mt over Aug. 1-19, Platts data showed.
Singapore’s August HSFO bunker sales will likely be similar or even slightly better than July, a market source said.
Ports in nearby India and Sri Lanka have also seen a marked increase in inquiries and are trying to emulate Singapore’s HSFO success by ramping up
“HPCL is offering HSFO 380 CST at Mumbai, Kochi, Kandla and Vizag [Visakhapatnam] with fine avails,” a company source told Platts. offers as demand for the grade accelerates.
“Compared with last year, we are experiencing almost double the orders for HSFO, mainly from scrubber-fitted container vessels. There are three to four big inquiries.”
At Kochi, HSFO demand stands at around 2,000 mt/month, a Mumbai-based bunker trader said, after no HSFO availabilities in the last four to five months. In Sri Lanka, Advantis Bunkering became the first supplier of delivered HSFO at Colombo port, banking on a long-term increase in calls by scrubber-fitted vessels, a company source said recently, with “multiple inquiries” from major shipping companies since launching delivered HSFO sales.
Advantis has secured a sale for 1,200 mt to be delivered between Aug. 25-30, another company source said. “Demand is picking up given the firm inquiries that are coming in.”
A physical bunker supplier with a substantial market share at the port of Colombo said that a plan to offer delivered HSFO is “currently in the works”.
Srubbers' uptick brightens HSFO outlook
The continued installation of exhaust gas cleaning systems, or scrubbers, is supporting HSFO demand.
Increasing familiarity of the technology and clarity of its benefits in tackling GHG emissions has diminished initial scepticism in its use.
According to the Clean Shipping Alliance, a recent study by CE Delft found the increase in CO2 footprint from the additional refining of marine gasoil to likely be in the range of 10%-15% and potentially as high as 25%. By contrast, the increased CO2 from EGCS is only in the 1%-1.5% range. Furthermore, the EGCS technology achieves much lower sulfur output than required by the IMO 2020 rule.
While companies are eager to use low-carbon fuels when they become available for sustainable shipping, scrubber technology remains a key component in meeting the 2030 milestone, S&P Global Platts Analytics said earlier this month.
The current scrubber fleet numbers about 4,500, but if clean alternative fuels do not achieve adequate penetration by 2030, this number could escalate to close to 7,000, Platts Analytics estimated.
The price differential between HSFO and Marine Fuel 0.5% sulfur, also known as the Hi-5 spread, has favoured the use of scrubbers.
In Singapore, this Hi-5 spread averaged $298.90/mt in January 2020 as the market transitioned to the IMO 2020 mandate. It narrowed to average as low as $60.32/mt in September 2020, but recovered to average $103.33/mt in January 2021, according to Platts data. This year up until July, the spread has, on a monthly basis, averaged mostly over $100/mt, and $111.44/mt over Aug. 1-19.