The CFR premiums for straight-run fuel oil (SRFO) to be delivered to Shandong in September have climbed because of tight supply, C1 learned from SRFO trading sources.
The premiums for M100 fuel oil have risen to US$61-63/mt, up by US$7/mt from the previous month. A Chinese state-owned company has bought M100 fuel oil for September delivery with CFR premiums at US$63/mt, said a trading source.
Because of converging refinery maintenance among Russian refineries, only 4-5 cargoes of M100 fuel oil are scheduled for September loading at Far East ports, just sufficient to meet demand from contracts, said the source.
This was echoed by another international trader, who said higher premiums can be attributable to less supply amid peak refinery maintenance worldwide. Asia will have about 24-mil bbl/d of refining capacity under maintenance in September and Europe will see 16-mil bbl/d of refining capacity under maintenance in the month, according to the trading source's data.
The premiums for 280CST fuel oil cargoes from Iran have also gone up. Kuo Oil has recently sold one 30,000-mt cargo of Iranian 280CST fuel oil to China for September arrival, with CFR premiums up by about US$8/mt to over US$30/mt, said market sources. However, this has not been confirmed by Kuo Oil yet.
Guangdong Zhenrong Energy, another supplier of Iranian 280CST fuel oil, will not supply any such fuel oil to China in September because of short supply from Iran, said a source with the company.
National Iranian Oil Company's exports of 280CST fuel oil for August and September have stayed low at about 160,000mt, and most of these cargoes remain in the Middle East, said a Singapore-based trader.
No fuel oil from Kazakhstan has been scheduled to reach China in September. "Chinese buyers' bids are so low that we do not even want to make an offer," said a source with Kazakhstan's state-owned oil company KMG.
