The differential between the physical 180 CST viscosity high sulfur fuel oil in Singapore and 380 CST viscosity HSFO in Rotterdam -- known as the East/West spread -- recovered Thursday from 23-month lows, but remains subdued with the ongoing Rotterdam firmness, Platts data shows.
The premium of the Singapore price over the Rotterdam price was assessed Thursday at $10.17/mt, after it plummeted to $3.49/mt Wednesday -- the lowest level since May 2011. On May 6, 2011, Singapore's better quality product flipped to a small discount to Rotterdam.
Although the market recovered on the day it was still holding close to 23-month lows.
"There was a bull play in Singapore, but that market has now collapsed. The East/West at these levels is not sustainable. We should see a rise in demand from Singapore," one market trader said.
European HSFO swaps traders also said they hoped for the market to recover, but the East/West front-month August swap has been fluctuating still at low values.
The swap was trading around $17/mt Thursday at 16:30 London time, up from $15.50/mt at Wednesday close, but was down in the Friday morning trading at $16/mt.
The narrowing of the spread came as Singapore has fallen a lot since the end of June. On June 21 the physical East/West spread was assessed at a 17-month high of $64.64/b, Platts data shows.
But since the beginning of July the Rotterdam prices have been keeping strong with the spot premium over the front-month swap trading in a $6-9.50/mt range, versus an average premium of $1.75/mt for the first six months of the year, Platts data shows.
