Home > Chemical News

Chemical News

Singapore LSMGO sales hit record high, sellers report 50-70% more inquiries

https://www.chemnet.com   Feb 12,2018 platts
As the global mandate to use cleaner marine fuels from 2020 looms, sales of low sulfur marine gasoil in Singapore hit a record high of 1.29 million mt last year, with sellers reporting a 50-70% increase in inquiries for the distillate compared to two years ago, trade sources said this week.

"There's more demand for LSMGO these days, especially from owners from Europe, or those sailing into [Emission Control Areas]," a trader said.

Conversely, a number of marine distillate suppliers in Singapore are seeing a drop in demand for marine gasoil.

One supplier, Seven Seas Oil Trading, is supplying low sulfur marine gasoil instead of MGO.

"When you're doing about 1,000-2,000 mt/month in sales of MGO compared with 10,000 mt/month of LSMGO, it's just more cost-efficient to supply low sulfur marine gasoil," Seven Seas Oil Trading's director Tang Weng Fei said. "It's about optimising the best use of our tankers."

Sales of 0.5% MGO in Singapore reached a new low of 736,100 mt last year, compared to an all-time high of 1.59 million mt achieved in 2010, data from the Maritime and Port Authority of Singapore showed.

Other suppliers said as demand for MGO dips, it is becoming harder to source it.

"Cargo players are bringing less MGO on their VLCCs recently," a bunker supplier said. "There are fewer VLCCs this month with MGO."

In spite of this tightness, the LSMGO-MGO spread has been steady at $5-$10/mt, a level that has been maintained over the past 18 months, trade sources said.

"The LSMGO-MGO spread is not so wide compared to $10-$15/mt in 2015, sometimes it can go as low as $3/mt. Demand for MGO now is mainly from old vessels, and if MGO is getting harder to source, I just tell my customers to buy LSMGO instead," a trader said.

Sales of 0.1% sulfur MGO in Singapore have risen steadily over the past five years. The city-state sold a record 1.29 million mt of LSMGO last year, up from 1.14 million mt the year before, and from 784,000 mt in 2015, MPA data showed.

The recent sales figures are a huge leap from 190,900 mt in 2013, when data on LSMGO sales first became available.

Monthly sales of LSMGO last year averaged 107,100 mt compared to 95,700 mt in 2016, whereas monthly sales of MGO averaged 61,300 mt last year, down from 2016's monthly average of 70,600 mt.

The International Maritime Organisation's global sulfur cap of 0.5% in bunker fuels, down from the current limit of 3.5%, comes into force on January 1, 2020.

Marine gasoil, LSMGO and ultra-low sulfur fuel oil look likely to become the fuels of choice in 2020 as the shipping industry moves away from heavy fuel oil to comply with IMO's more stringent sulfur cap, trade sources said.
 Print  |    add to Favorites  |    Close