SINGAPORE- Shippers and trading firms are facing longer waits and higher prices for low-sulphur fuel deliveries at Singapore, the world’s top bunker hub, as refueling demand rises due to ship diversions from Red Sea tensions, industry sources told Reuters.
Ships are topping up more at hubs such as Singapore where fuel is more competitively priced compared to farther-flung ports, after a growing number of vessels re-route around Africa to avoid potential attacks.
As a result, availability of slots for bunker barges, which supply marine fuel to ships, has tightened for the most actively traded very low sulphur fuel oil (VLSFO) grade.
The crunch is also exacerbated by some operators previously converting their low-sulphur barges to high-sulphur barges, bunkering sources said. Refueling demand for high sulphur fuel oil has recovered in recent years after more scrubber-installed vessels came online.
The wait for the earliest available slots for booking VLSFO barges has roughly doubled to about two weeks, compared to the typical average of one week, sources said.
Singapore bunker premiums for VLSFO have trended higher to more than $30 a metric ton over cargo quotes for prompt delivery dates, climbing from $25 to $30 in mid-January and about $20 in early January. The earlier the delivery, the higher the premium.
While there were still limited slots available for nearer-term dates, such deliveries can command premiums of close to $50 per ton, sources said.
“Should tensions in the Red Sea continue, tightness in Singapore’s bunker market will persist due to increased demand from longer voyage times,” said Ivan Mathews, consultancy FGE’s head of Asia refining and global fuel oil service.
