Availability of low sulphur fuels is plentiful in major European and African ports, and HSFO remains more limited in the Canary Islands and South Africa than in the ARA and Gibraltar Strait.
Fuel availability has not changed much in Europe and Africa in recent months. VLSFO supply is steady and European prices are under pressure from more muted demand relative to other transport fuels.
The discount of delivered VLSFO to ICE Low Sulphur Gasoil futures has widened from $54/mt a month ago to $83/mt now, as a sign of VLSFO’s relative weakness. Rising demand has lent support to middle distillate refining margins in both Northwest Europe and the Mediterranean, but margins remain low. Middle distillates such as gasoil are seeing stronger demand and falling inventory levels in Europe.
ARA’s independent gasoil inventories fell by 3% to 15.23 million bbls, which is well below their five-year average.
Delivered LSMGO has also strengthened against VLSFO in the past month, with LSMGO’s premium nearly doubling from $40/mt to $76/mt in Rotterdam. While higher road fuel demand has given middle distillate margins a boost, fuel oil margins are down to multi-month lows. Fuel oil has weakened amid ample supply in Europe and unfavourable arbitrage economics pulling less cargo volumes to Singapore.
ARA’s fuel oil stocks declined by 4% to a four-month low of 7.65 million bbls last week. There is slightly less fuel oil in storage than the average for the past five years. There is also considerably less fuel oil stored than at the same time last year when storage tanks brimmed amid Covid-19 restrictions and demand destruction.
Lead times of 3-4 days are recommended for HSFO380 stems in ARA and the Gibraltar Strait. Six days are advised in the Canary Islands, where two suppliers offer the grade. Another supplier occasionally has capacity to deliver HSFO380 on spot, but mainly focuses on contract deliveries.
Two suppliers can deliver HSFO380 by barge in the Hamburg area, where demand for the grade is muted. A third supplier can deliver in Cuxhaven.
HSFO180 availability remains tight for prompt dates in South Africa’s Port Elizabeth and Durban.
High winds and swell could disrupt bunkering at the Algoa Bay anchorage by Port Elizabeth from Thursday and intermittently over the coming week.
Las Palmas’ delivery backlog should start to clear over the weekend. Outer anchorage bunkering is still suspended in Las Palmas, which has pushed stems into inner anchorage and congested the port in the past weeks. Calmer weather is expected to bring swell down to more manageable levels on Friday.
Source: ENGINE (https://engine.online/)