MRPL sells 80,000T fuel oil at six-year high prices

MRPL sells 80,000T fuel oil at six-year high prices

Mangalore Today News Network

Mangalore, Feb 8: Mangalore Refinery & Petrochemical Ltd sold a low-density fuel oil cargo of 80,000 tonnes at six-year high prices due to tight supplies, traders said on Monday, February 7.   

The 380-centistoke (cst) parcel, for March 8-10 loading from New Mangalore, was sold to Japan’s Itochu at a premium of $6.00-$7.00 a tonne to Singapore spot quotes on a free-on-board (FOB) basis, up from a premium of $4.50-$5.00, and the highest level since 2004.   

This is the second parcel sold by MRPL at multi-year high prices, with the previous one for end-February fetching the highest premium in five years.    

The East Asian market has suffered from tight supplies for three straight months, with Western arbitrage inflows at below-average levels of 3 million tonnes for each up till January.    

"It’s a good 30 percent higher than the previous transaction, and that was already a record high," an India-based trader said. "The unbelievable MRPL numbers shows just how short the market is on density."   

The Indian refiner also offered a three-parcel semi-term lot, for lifting on March 18-22, April 16-20 and May 14-18, via tender, which closes on Wednesday and will remain valid till a day later.    

Another refiner, Indian Oil Corp. (IOC), has issued a tender to sell 15,000 tonnes of 180-cst, for Feb. 28-March 2 loading from Haldia. The result is pending. It cancelled another one for 35,000 tonnes of 380-cst, for Feb. 27-March 1, from Chennai.   

Traders said Itochu has also bought a high-density cargo -- 40,000 tonnes of 1.0-density for Feb. 12-14 loading -- from Taiwan’s Formosa last week, which compliments the low-density MRPL lot for blending into bunkers grade 380-cst, or the benchmark 180-cst grade.    

The Japanese trader, which has also bought a low-viscosity, high-density pyrolysis fuel oil cargo from Formosa, has an active presence in the Singapore fuel oil market, mainly on the cargo-trading side.   

The tight Singapore market continues to draw Indian cargoes eastwards, with around 450,000 tonnes of February-loading parcels sold, down from 500,000-550,000 for January-lifting.    

February Western arrivals are higher, at 3.5-3.6 million tonnes, but most of the arrivals are of high-viscosity, high-density barrels, leaving the market short of on-specificaiton parcels.    

The supply tightness drove the prompt market to above two-year highs, with cash differentials for both the 180-cst and 380-cst grades surging above $9.00 a tonne to Singapore spot quotes last Wednesday.

Reuters