Petroleum product inventories at the port of Fujairah in the United Arab Emirates fell to their lowest level in 10 weeks in the week to September 5, led by the drop in light and middle distillates, according to data from the area. of the Fujairah Petroleum Industry published on September 7th.
Total inventories stood at 21.739 million barrels as of September 5, down 1.1% from the previous week and the lowest since June 27, according to FOIZ data. This time last year, inventories were at two-year lows, wiping out all the hoarding as demand recovered from COVID-19. Inventories were now 22.9% higher than a year earlier.
Based on data provided exclusively to S&P Global Commodity Insights.
Only heavy distillates used as fuel for power generation and marine bunkers climbed during the week, rising 2.8% to 11.997 million barrels – the highest in three weeks.
Weak demand for low-sulphur marine fuel has put pressure on premiums, market sources said.
“The LSFO [market] is completely silent, which is why providers fight [over limited demand]said a Fujairah-based bunker provider on September 7.
Bunker premiums at 0.5% S marine fuel delivered by Platts Fujairah over freight valuations FOB Singapore Marine Fuel 0.5% S fell to an over-six-month low of $35.89/tonne on September 6, and averaged $44.40/ton in September. 1-6 vs $93.94/mt in August, according to S&P Global data.
Demand for high-sulphur fuel oil is relatively stronger in Fujairah, but terminal congestion has delayed barge refueling times, local traders said. This will likely lead to increased inventory, they added.
“HSFO barges are spending more time queuing for berths lately as more and more vessels, such as tankers, request cargo work here,” a bunker supplier said.
Russia was the main source of fuel oil to Fujairah in August, with a record 157,000 bpd, according to Kpler shipping data. Fujairah has become a major destination for Russian goods since Moscow’s military invasion of Ukraine in February and ensuing sanctions have caused some buyers to shun supplies from the country.
Naphtha exports also rose, averaging 80,600 bpd in August, well above July’s pace of 40,900 bpd, according to shipment data from Kpler. Japan, South Korea, China and India were the main destinations for petrochemical raw materials.
Abundant naphtha supply from the Middle East weighed on the Asian market, which was already facing insufficient demand from naphtha-fired steam crackers. Asian naphtha-fired steam crackers had reduced operating rates due to low revenues in downstream derived segments.
Expected run rates averaged in the low 80% range for September, with average run rates among operators in South Korea’s top naphtha spot buyer at 78%, according to data from operation of steam crackers collected by S&P Global.
The bearish trend in the overall naphtha market was reflected in the CFR Japan naphtha physical crack against first-month ICE Brent crude futures which fell into negative territory in July and hit a low of 11 weeks down $103.55/mt on August 30, S&P Global data showed. The physical crack was last valued at minus $39.35/mt at the September 6 Asian close.
However, naphtha cargoes from the Middle East for use as a separation feedstock were in demand due to healthy margins for paraxylene production and barriers to obtaining unauthorized full-range naphtha heavy cargoes from other origins. .
The spread between key marker paraxylene CFR Taiwan/China and naphtha C+F Japan averaged $336.70/mt in July and $380.86/mt in August, above breakeven typical around $280 to $300/mt, according to S&P Global data. The gap was last priced at $391.50/ton at the September 6 Asian close, keeping demand for these cargoes firm.
Stocks of light distillates were 22.7% higher than the same period last year, while middle distillates were 27.29% lower than the previous year’s level. Heavy distillates climbed 45.51% over the same period.