Japan’s bunker fuel demand thin but uptick expected


Japan’s bunker fuel demand has softened following a peak in August, when buyers turned to Japanese supplies after a spate of fuel contamination issues in the Singapore bunker market. Off-specification bunker fuel has had significant impact on bunker markets this year. The compound suspected to have caused the damage of more than 100 vessels worldwide this year is 4-cumyl-phenol. Its adhesive and binding qualities caused plungers and pumps to stick, leading to engine failure in some cases.

Harmful components were first seen in samples of bunker fuel in the US Gulf earlier this year, but contaminated fuel cargoes were exported to Singapore and elsewhere around the world since then.

Japanese refineries are self-sufficient in domestic fuel production, and it does not import any fuel oil. When buyers flocked to Japan for bunker fuel to avoid contaminated supplies, prices surged.

In October, when contamination became less of an issue, Japanese bunker prices eased amid sufficient supplies.

However, demand for bunker fuel in Japan has been slow to take off in November, market sources said.

“Demand that came to Japan due to concerns over phenol cargoes have calmed,” a trader said.

380 CST bunker fuel for delivery at Japan eased from an average of $529/mt in October to $501/mt to date in November, S&P Global Platts data showed.

Market sources expect demand to pick up before barges stop operations from end-December to early-January.

“Some vessels are starting to take two trips worth of fuel, so that they don’t have to go through the hassle of refueling around the New Year [when there are] additional costs and barge availability is tighter,” a trader said.

“Some buyers plan to purchase bunker requirements for two voyages because of year-end [barge] suspension,” a second trader said.

(Source: Platts)

Sea News, November 19

Baibhav Mishra
Author: Baibhav Mishra

Associate Editor, Sea News

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