Asian HSFO Struggles to Woo Medium Sulfur Fuel Oil Despite Price Surge: Traders

Despite firm values of high sulfur fuel oil in Asia, medium sulfur fuel oil is still heading to the low sulfur fuel oil pool on account of lower conversion costs, adding to market glut, traders told S&P Global Platts in the week of July 26. Medium sulfur fuel oil with sulfur content of around 1% can go into either LSFO pool or HSFO pool, depending on the market, traders said. However, the interest is more towards the LSFO pool versus the HSFO, as the cost of converting a lower value product to a higher value is much more.

“It is close to the border, but medium sulfur grade is still going to LSFO pool,” said a fuel oil trader based in Singapore. The 1% sulfur grade fuel oil mainly comes from Europe and Far East Russia, traders said. About 1.5-2 million mt of fuel oil cargoes in total are expected to arrive in Singapore area in August, market sources said.

Meanwhile, three to four MR-sized straight-run fuel oil cargoes with sulfur content of 1%-1.2% are typically exported from Far East Russia every month. Medium sulfur fuel oil with sulfur content of around 1% has been traded at discounts of around minus $95/mt to $90/mt, traders said…

View entirety: S&P Global Platts