Asia’s Very Low Sulphur Fuel Oil (VLSFO) market continued its rebound for a second consecutive day on Wednesday, while the hi-5 fuel oil spread widened to more than a five-week high.
The July Hi-5 spread, which is the price premium of VLSFO over 380-cst High Sulphur Fuel Oil (HSFO), closed at $103.50 a metric ton, based on LSEG data.
The spread affects bunkering and scrubber economics, as a wider Hi-5 spread encourages scrubber-installed ships to opt for more HSFO for bunkering amid a more expensive VLSFO premium.
In late May, the Hi-5 had crunched to its narrowest since December 2020, dipping below $80 a ton amid a strengthening HSFO market.
The spread has since widened away from the multi-year lows, after VLSFO benchmarks rebounded this week due to stronger bids from major market players, said trade sources.
Singapore’s VLSFO cash premium climbed to $5.40 a ton on Wednesday, extending gains from a three-week high in the previous session, while cracks rose to premiums of $10.40 a barrel.
Meanwhile, High-Sulphur benchmarks weakened. Cash premium for 380-cst HSFO fell to $4.50 a ton, while cracks held at discounts of about $6 a barrel.
In tenders, South Korea’s S-Oil recently sold slurry and light cycle oil for July loading dates, based on trade sources and shipping records this week.
The refiner had offered 22,000 tons of slurry for loading between July 23 and 27, along with 300,000 barrels of light cycle oil for loading between July 24 and 28.
Source: Hellenic Shipping News
