Turkish refiner Tupras has turned to the high sulfur straight-run fuel oil market over the summer months, an unusual move in a time of record-high fuel oil cracks, underlining the tightness currently facing the European residual segment, traders said.
Tupras has tendered for delivery of 30,000 mt of HSSR for delivery in each month of July, August and September, traders aware of the tender details said.
Galaxy was the seller of the July cargo, according to traders, who said the deal involved 2% sulfur HSSR from the Black Sea port of Tuapse. Two traders said the trade had happened at ICE Brent futures minus $2/b, while two others said it was probably slightly below this.
Fuel oil cracks generally are at multiyear highs globally due to reduced supply out of Russia and Venezuela, strong power generation demand in Saudi Arabia, and cuts to heavy sour crude runs as a result of the prolonged OPEC-led cuts to crude production.
Broker reports suggest the Handysize vessel Bassilevousa has been fixed for the deal, although this has not been confirmed by Galaxy or Tupras.
The 30,000/mt dirty product carrier will load June 27-28 from the port of Tupase for July delivery into Turkey, according to traders and cFlow, Platts trade flow software.
The reasons for importing HSSR could be multiple, sources said.
"I guess they had some spare capacity somewhere, either secondary units or perhaps basis their current crude slate for HSSR," one source said.
Alternatively, Tupras could blend the HSSR with crude to process in their crude distillation units, to improve refining margins which have been under pressure from rising premiums of heavy sour crudes, of which they are a regular buyer.
"One of their CDUs could be offline," another trader said.
