An unexpected outage in the week started March 7 at German energy trader Uniper's Fujairah-based crude processing unit has crimped product availability, sending the premium for marine fuel 0.5%S bunker delivered at the port to a 49-week high on March 12.
"[The unit] has been stopped since last few days. [Uniper] is currently depleting its available stocks," said a Dubai-based source close to the company and familiar with the matter.
The premium for Fujairah-delivered marine fuel 0.5%S bunker over FOB Singapore marine fuel 0.5%S cargo surged $13.42/mt day on day at $24.60/mt. The premium was last higher on April 6, 2020, when it was assessed at $27.24/mt, S&P Global Platts data showed.
Product availability has been getting increasingly tight over the past few days in the Middle Eastern port of Fujairah.
As of the last trading day of the week, most sellers were not able to offer against spot market inquiries for product deliverable prior to March 20 while only a few were still able to offer product deliverable from March 17 onward.
Fujairah-delivered marine fuel 0.5%S bunker was heard offered at $540-$545/mt during the Platts Market on Close assessment process on March 12, with the offer at the higher end of the range for product deliverable from March 17 onward.
Fujairah-delivered marine fuel 0.5%S bunker was assessed at $540/mt, $20/mt higher day on day, compared with a $6.58/mt day-on-day rise in upstream Singapore marine fuel 0.5%S cargo, which was assessed at $515.40/mt March 12.
"There are some delays from the refinery side, it seems. There is no oil in the market, so I expect a tight and busy week next week," a Dubai-based trader said.
"It was described as a "trip"," a Dubai-based bunker supplier said, referring to Uniper's refinery outage.
Uniper had recently undergone some upgradation work, which called for changing the refinery configuration, but the commissioning had "not gone well," according to the source familiar with the matter. "It needs to be fine-tuned," the source said.
"The unit, which went into shutdown this week, will ramp up tonight," a company source said, adding that he could not comment any further details of the outage at this stage.
The second unit was expected to restart around the middle of the week starting March 14, he added.
Uniper has two 40,000 b/d distillation columns in Fujairah, right alongside Vitol's 82,000 b/d refinery. These two columns, which together constitute a micro refinery of sorts, have been designed to process low sulfur crude oils to produce low sulfur fuel oil to the tune of about 300,000 mt/month.
There was not much optimism among market participants that the supply situation would improve soon.
"It'll be the situation for the rest of the month," said a Fujairah-based trader.
"If [restart] gets delayed, then [Uniper] will be in trouble," said the source familiar with the matter, when asked if currently available stocks will suffice to meet demand till the unit comes back online.
