ENGINE: Europe & Africa Bunker Fuel Availability Outlook

Prompt deliveries of low sulphur stems remain widely available in ARA, Gibraltar Strait and South African ports, while HSFO380 is in slightly better supply in the Canary Islands this week.

Independent inventories of fuel oil in the Amsterdam-Rotterdam-Antwerp (ARA) hub fell to a four-month low of 7.65 million bbls today, while gasoil inventories of 15.23 million bbls are at their lowest point in over a year. But ARA’s bunker market remain well supplied with VLSFO and LSMGO and prompt product is widely available.

European refinery run rates are expected to rise in tandem with higher transport fuel demand as Covid-19 lockdown measures ease to lift refinery margins for products such as gasoline and diesel. But weaker HSFO margins could prompt refineries to lighten their crude slates, which could mean less HSFO production for certain refineries.

With more low sulphur vacuum gasoil going to blend gasoline – for which refinery margins are increasing with recovering road traffic activity – low sulphur blending components for VLSFO blending could tighten to push up the sulphur level of VLSFO. ARA’s VLSFO sulphur content averaged 0.50% last week, but has dipped to 0.49% this week. Blending close to the limit increases the risk for buyers to purchase and burn fuels failing to comply with global sulphur regulations.

Availability of HSFO380 has improved in the Canary Islands as a supplier has started offering the grade again. Six days of lead time is still recommended for HSFO380 stems in the Canary Islands, however, as another supplier has stopped offering the grade.

Lead times for HSFO380 are shorter at 3-4 days in ARA and the Gibraltar Strait ports, where more suppliers offer the grade. Gibraltar’s HSFO380 price has flipped to a discount of around $6/mt to that in Las Palmas in the past week.

Bunker suppliers are delayed by up to two days in Las Palmas as high swell continues to limit deliveries to the port’s inner anchorage, where only one vessel can bunker at a time. The swell is forecast to remain high until the end of next week and heavy delays are expected until then.

Tenerife on the other side of the Canary Islands has been more sheltered from the rough seas and bunkering is going ahead at the port’s outer anchorage without problems, according to port agency MH Bland. The Gibraltar Strait ports and Tenerife have minimal delays and congestion.

Winds bordering on gale-strength reached Malta on Thursday. The island state’s offshore bunkering areas were all operational as of Thursday morning, but deliveries could be complicated by high swell later in the day, MH Bland said.

VLSFO and LSMGO can be delivered promptly in South African ports including Durban and Port Elizabeth. HSFO180 is tighter and require longer lead times.
Source: ENGINE


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