High sulfur bunker fuel prices in Peru and Ecuador climbed on Monday as the result of unexpected production delays and pricing decisions at state-run refineries.
In Callao, Peru, two physical suppliers and a trader said that Petroperu on Saturday announced a price increase for IFO 380 CST of about $15. Based on indications from those market participants, that product was assessed up $12 from Friday to $342/mt. In the competing port of Guayaquil, Ecuador, where suppliers for several days have reported limited availability due to delivery delays from state refiner Petroecuador, IFO 380 was assessed at $329/mt, an increase of $6 from Friday.
"The price increased a lot" in Peru, one trader with business in Callao said. "I was so surprised."
Price swings in the South American ports come amid ongoing construction at state-run refineries. Petroperu's 62,000 b/d Talara oil refinery has been working at 60% of its total capacity due to expansion works expected to last until 2019. At Petroecuador, one unit at the 45,000 b/d Libertad refinery has been offline due to maintenance since mid-May.
One physical supplier in Peru speculated that Saturday's price increase was simply due to Petroperu getting around to passing on higher residual costs.
"They take their time," the supplier said. Delayed price adjustments are more problematic when costs fall, he added.
"When there's a decrease we are behind the market for two weeks and it's a big problem," the supplier said.
Petroperu is the only supplier of fuel oil in the Peruvian market, and most of that production is sold to the export market through tenders, which leaves limited volumes to the bunker market. A voice message left on a Petroperu media line on Monday was not immediately returned.
In Guayaquil, Ecuador, several suppliers Monday said they were still waiting to load product after unexpected delays from Petroecuador last week. Petroecuador is the sole supplier of fuel oil in Ecuador and power plants have a priority over the bunker market. One supplier in Guayaquil said Petroecuador started resuming deliveries on October 15 after several days out of the market.
A separate supplier said that anyone who couldn't load over the weekend would be delayed further because of bad weather.
"So far we have not loaded, but surely tomorrow," one supplier said. The suppliers said out-of-spec product had caused the Petroecuador delays.
A message left for comment at Petroecuador on Monday was not immediately returned.
