Most theoretical blending margins for bunker fuel oil worsened in the past week due to higher blendstock costs amid surging international crude, C1 found.
In East China, the margin for blending bunker fuel oil with homemade blendstock and imported 380CST fuel oil in combination settled at minus Yuan 827/mt on Feb 24, versus minus Yuan 558/mt on Feb 17, C1's assessment shows.
The import costs of 380CST fuel oil soared about Yuan 319/mt to Yuan 5,617/mt in the period. Meanwhile, the prices of bunker 180CST fuel oil just climbed Yuan 50/mt to Yuan 4,800-4,850/mt.
In South China, the margin for blending bunker fuel oil with domestic blendstock worsened from minus Yuan 185/mt to minus Yuan 268/mt in the period, he assessment indicates. Local blendstock costs went up Yuan 133/mt to Yuan 5,058/mt, while bunker fuel oil prices just gained about Yuan 50/mt to Yuan 4,800-4,850/mt.
In contrast, the margin for blending bunker fuel oil with domestic blendstock improved from negative Yuan 37/mt to negative Yuan 5/mt in East China, as most blenders used shale oil that was previously purchased at lower costs.
The blending margins are likely to worsen in the coming week, since blendstock costs are estimated to go up further when bunker fuel oil prices lag behind.
