In International Shipping News 20/03/2018
There will likely be leaner volumes of bunker fuel available in West Japan until end-March due to Japan’s JXTG Nippon Oil and Energy Corp.’s decision to temporarily stop accepting fresh spot bunker fuel orders at Mizushima due to strong bunker fuel demand, trade sources Monday said.
JXTG’s 320,200 b/d refinery at Mizushima, located in Western Japan, is the biggest supplier of bunker fuel in the area. Trade sources estimated JXTG’s monthly bunker fuel sales volumes at Mizushima at around 50,000 mt/month.
A source close to the refiner said late Friday that JXTG had to temporarily halt accepting new bunker fuel orders for vessels calling at Mizushima due to firm demand, with the stoppage to last until the end of March.
“This development will have a big impact as [bunker fuel] availabilities in West Japan will be very tight,” a Japan-based trader said Monday.
“Bunker fuel costs will be higher due to limited supply, and buyers may have to bear extra barging costs as well, especially if the distance for the barge to travel is very far,” he said, adding that bunker fuel buyers may have to cough up around $5/mt extra for barging fees.
Apart from JXTG’s Mizushima refinery, buyers can also take delivery of bunker fuel from a handful of refiners or terminals scattered around the West Japan area.
Traders said there were alternative suppliers such as Cosmo Oil’s 100,000 b/d Sakai refinery and an oil terminal at Sakaide, JXTG’s 136,000 b/d Oita and 135,000 b/d Sakai refineries, as well as Idemitsu Kosan’s Tokuyama oil terminal. JXTG also has a 120,000 b/d Marifu refinery in western Japan, but traders said that plant does not offer bunker fuel.
Market participants Monday estimated monthly sales volumes at JXTG’s Sakai refinery at around 35,000 mt-40,000 mt/month, JXTG’s Oita refinery at around 20,000 mt/month, and Cosmo’s Sakai refinery at around 5,000 mt-10,000 mt/month. The Sakaide oil terminal supplies around 10,000 mt-15,000 mt of bunker fuel a month, while volumes could not be ascertained for Idemitsu’s Tokuyama oil terminal Monday.
“We are receiving good demand in Japan, especially for iron ore vessels at West Japan,” a Japanese trader said Monday.
“There are many industries around the Mizushima area, so many vessels sail there and now there is barge congestion due to the good demand so it is hard to transport bunker fuel from Sakai to Mizushima area, for example… it is difficult but not impossible,” he said.
While traders generally agree that bunker fuel prices at West Japan look set to head north due to tighter supplies and more difficult logistics required to move bunker fuel from alternative suppliers for delivery to vessels at the Mizushima area, other sources said demand would still play an important role in determining the extent of the price increase.
“For us, there was no big increase in [West Japan] bunker fuel prices on Friday because it just so happened that there were no inquiries,” one trader said.
Another source agreed, saying that bunker fuel demand from West Japan was “not so big” on Friday.
Market sources also said that in the event the shortage becomes too severe in West Japan, refiners could arrange for additional bunker fuel supplies to be moved from eastern Japan to western Japan.
At the Asian close Friday, Japanese trader Mitsui was bidding for 300 mt of 380 CST bunker fuel for delivery March 21 at Setouchi, West Japan, during the Platts Market on Close assessment process. The trader’s final bid of $403.50/mt stood till the end of the MOC process without attracting any selling interest. This led to 380 CST bunker fuel for delivery at West Japan assessed at $404/mt Friday, up $6/mt from Thursday.
Source: Platts
