The premium for delivered 380 CST high sulfur fuel oil in the Shanghai bunker market to the benchmark Singapore 380 CST HSFO cargo assessment hit a more than two-year high at $111.71/mt on April 27, S&P Global Commodity Insights data showed.

The premium was last higher at $113.41/mt on Jan. 22, 2020, the data showed.

Buyers of delivered HSFO bunkers at China’s ports are currently faced with fewer options at less competitive prices than usual because few suppliers have adequate parcels to offer, shipping company sources said.

“HSFO demand is strong and the local supply situation is only expected to ease from mid-May with some replenishment stocks,” a trader in China said.

The four main HSFO suppliers are Sinopec, Chimbusco, CEFC International and Zhejiang Seaport, with Sinopec and Chimbusco responsible for the bulk of HSFO bunker sales at Shanghai and Zhoushan, local traders said.

“[HSFO] bunker prices are not that competitive at Shanghai and Zhoushan,” one shipping company source said, adding that oil majors have either retracted offers or had limited supply to sell.

Only one oil major was seen offering delivered HSFO bunkers at the Yangtze River port of Jiangyin, at a $20-$30/mt premium to the same grade offered at Zhoushan, the source added.

Delivered HSFO bunker prices in Shanghai are typical $5-$10/mt higher than in Zhoushan, according to local bunker suppliers.

“One of the main competitors has already run dry of HSFO supplies and has stayed out of the market, which explains the offers at high prices,” a Shanghai-based bunker supplier said.

Traders estimate HSFO bunker sales comprise 9% of bunker fuel sales in China.

Bonded bunker fuel oil sales in China rose 1.9% year on year to 4.925 million mt in the first quarter, but were down 2.8% from the previous quarter, data from market research firm Longzhong Information published April 21 showed.

Zhoushan bonded fuel oil bunker sales were estimated to have risen 16% year on year to 1.37 million mt by traders polled by S&P Global.

HSFO bunker sales at Zhoushan comprised around 20% of total bunker sales in March, Zhoushan-based suppliers said.

Source: Hellenic Shipping News