July 14th 2015
The discount of delivered RMK 500 CST bunker fuel to RMG 380 CST bunker fuel in the Rotterdam region has fallen to a 23-week low on adequate availability, scarce demand and high level of competition, sources said Tuesday.
RMK 500 CST delivered bunker fuel in Rotterdam dropped by $5/mt Tuesday, while RMG 380 CST fuel weakened by $2/mt, widening the discount to $11/mt, a level it was last at February 2.
“[The RMK 500 CST] is weak because of the good availability and decreased demand,” a supplier said. “It’s an ongoing issue, during the summer demand is deepening.”
RMK outflows from the region have fallen over the last month after the arbitrage to Singapore shut.
“[The fall in differentials] is due to a lack of arb. Usually you would move RMK to Singapore, but arb spreads are narrow, so RMK values have to go down,” a trader said.
BP is the only major company moving material to Asia currently, much to the surprise of market participants, but it is quite likely that most of the material is RMG rather than RMK, according to a source.
“I don’t understand how they do it. When I do the calculations I don’t get a workable arb,” a trader said.
BP has bought 298,000 mt of RMG 380 CST fuel oil FOB basis Rotterdam in the Platts Market on Close assessment process since the start of July, Platts data shows.