Premiums on very low-sulphur fuel oil in Singapore are increasing rapidly due to strong demand from shipowners filling up their vessels’ fuel tanks to the max as they prepare to divert around the Cape of Good Hope.
VLSFO premiums in the world’s top bunkering port are trending to above $30 per tonne over cargo quotes, for prompt delivery dates, according to Reuters.
These premiums, which are over and above the quoted price, are what suppliers charge customers to secure prompt delivery. They have climbed from $20 per metric tonne in early January to $30 per mt in mid-January.
Shipping companies and traders told the UK-based news agency they are facing longer waits and higher prices for VLSFO deliveries at Singapore, the world’s top bunker hub.
Diverting vessels are topping up in Singapore, where VLSFO is more competitively priced compared with downstream ports along the extended route around the southern tip of Africa.
A vessel’s course across the Indian Ocean from Singapore and around the Cape of Good Hope leaves either Mauritius or South African ports as the only viable place to bunker unless tanks are topped up elsewhere in South East Asia before departing on the voyage.
VLSFO is priced at $754 per mt ex-wharf in Durban and $747 per mt, while it costs $646 per mt in Singapore, according to the latest figures from Integr8 Fuels and Netpas on Friday.
The wait time for the earliest available slots for VLSFO bunker tankers in Singapore has risen to about two weeks, as compared to the usual average of one week, according to Reuters.
Earlier slots can command premiums of as much as $50 per mt.
TradeWinds reported on Thursday that diversions around the Cape of Good Hope are proving costly due to the large volume of extra bunkers consumed.
Diverting container ships are seeing bunker expenses increase by 35% for a voyage from Asia to north-west Europe as they are going faster, pushing the costs of diversions even higher, according to a report by LSEG Research.
Although tanker transits through the Red Sea have dropped by only 10%, diversions added costs of $932,905 per voyage across the entire tanker sector.
The tightness in the Singapore bunker market is expected to persist as long as the Red Sea crisis continues.
