The import margins of Russian M100 fuel oil (medium-sulfur 180CST fuel oil) turned positive in Shandong in the past two weeks or so, thanks to large drops in import costs, C1 observed. This was the first time for such margins to be positive in about ten months.
Based on related prices on May 23, the theoretical import margins settled at Yuan 30/mt, versus minus Yuan 175/mt on May 5, C1's assessment shows.
The CFR price of M100 fuel oil plunged about 7% or US$51.87/mt to US$691.75/mt in the period. Prices in Singapore tumbled after international crude.
Meanwhile, the spot prices of M100 fuel oil just declined about 3% or Yuan 200/mt to Yuan 6,400/mt in Shandong, the assessment indicates. Prices in Shandong did not fall as significantly as in Singapore thanks to a bit tight supply. In addition, actual import costs were still high, said an importer in Shandong. "Overseas suppliers were not willing to supply fuel oil at fixed prices after prices tumbled in Singapore," the importer explained.
The import margins may not stay positive for long, as some importers may have to trim prices to recover capital amid sparse trading. Shandong independent refineries are still hesitant about buying imported fuel oil amid fluctuating international market.
