Singapore’s low sulfur fuel oil arrivals from Europe are expected to fall in November as persistently high freight rates continue to shut the arbitrage window, even as the price spread between Singapore and Rotterdam remained at a record high, Asian and European trade sources said.

The world’s largest bunkering hub, Singapore, is now expected to receive around 1.3 million-1.5 million metric tons LSFO from the West in November, down from about 1.6 million-1.7 million mt in October, multiple Singapore-based traders told Platts, part of S&P Global Energy.

“Indeed, November arrivals are looking a bit lower for now” compared with October, said a Singapore-based trader, adding “the high freight rates are making the Europe arbitrage difficult, especially on bigger ships… Brazilian inflow is lower as well, and some oil seems to be going to Fujairah.”

Platts assessed the spread between Singapore marine fuel 0.5%S cargo and FOB Rotterdam 0.5%S barge assessments, or the East-West spread, at $192/mt Oct. 28, widening from $172/mt Oct. 27. The spread has gained 16.5% over the past two weeks and stands at its widest level since Platts began tracking the data in April 2022.

“The East-West spread is super wide, but freight is very, very high – be it from Europe, or be it from Brazil,” said a second Singapore-based trader, while a couple of other traders said some market participants were trying to move some arbitrage volumes by smaller vessels.

Tighter supplies

Singapore has faced a shortage of very low sulfur blending components in recent months. Traders said the closed arbitrage from Europe will also restrict medium sulfur component flows, tightening the marine fuel market further.

A third Singapore-based trader said he expects most November arrivals to be concentrated in the first half of the month, tightening second-half supplies.

“Even freight is much higher, some of the traders have already closed deals for November delivery. So far, we have not seen any cancellations. Overall — month over month – November will not witness a huge change, but some drop,” said the same trader.

Platts assessed the Singapore marine fuel 0.5%S cargo’s differential over the Mean of Platts Singapore marine fuel 0.5%S assessment at a premium of $31.42/mt at the Asian close Oct. 28, up from $27.85/mt in the preceding session, hitting its highest since Oct. 1, when it was assessed at $31.75/mt.

In European markets, participants noted fewer eastbound fuel oil fixtures amid elevated dirty tanker rates.

“Arbs are all closed,” said one European trader source.

However, some volumes continue to move, with traders increasingly favoring smaller vessels.

“There has been some volume fixed, to both Singapore and US Atlantic Coast, mostly on MRs and Panamaxes,” a second source said.

An additional source said that with current freight costs, “an MR is more attractive, you can save $10-$15/mt vs a Suezmax.”

Source: Platts