Bleak short-term picture for low sulphur in Singapore

Commentary summary:

• Significant builds in March balances are expected in Singapore due to incoming low sulphur cargoes from Europe, pressuring the 0.5 spreads further downward.

• Dangote molecules remain workable for Singapore 0.5 blending, while other regions like Europe face challenges due to impractical parcel sizes.

• Dar Blend exports are resuming after a year, adding potential supply to the Fujairah and Singapore blending pool, though initial specs are expected to be suboptimal.

• Blending economics indicate ample supply of affordable components, likely leading to weaker premiums and spreads in the low sulphur market.

The reality is that the short term picture does not look rosy for the low sulphur complex in Singapore.

Fundamentally, it looks like big builds in March balance are quite likely. A good number of low sulphur arb cargoes from Europe were booked for Singapore at the end of last month that are starting to make their way to Asia. Mr Market is of course well aware of that. Sing 0.5 Mar/Apr has gone from $7.5 just three weeks back to $4.5 now.

Hoa brings extensive experience, having led fuel oil analysis at Trafigura and worked across crude, diesel, and APAC power markets. Hoa now leads the development of Sparta’s forward-looking tools for fuel oil and feedstocks.

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