Narrowing Singapore Arbitrage Spread With Rotterdam Sees 500 cSt Discount to 380 Widen to 23-Week Low

by Ship & Bunker News Team
Wednesday July 15, 2015

The discount for RMK 500 cSt bunkers compared to RMG 380 cSt product in Rotterdam Tuesday fell to a 23-week low of $11 per metric tonne (pmt), according to data from Platts.

Low demand due to a lack of arbitrage opportunities with Singapore, along with good avails and a high level of competition were cited as reasons behind the slide.

"[The RMK 500 CST] is weak because of the good availability and decreased demand," a supplier told Platts.

"It's an ongoing issue, during the summer demand is deepening."

Singapore is a typical destination for RMK exports from the region, but market players say that in recent weeks the arbitrage spreads have narrowed to the point of being unprofitable.

"When I do the calculations I don't get a workable arb," commented one trader.

"So RMK values have to go down."

500 cSt material has been increasing in popularity in recent years, and in March experts predicted that it will eventually replace IFO380 as the world's dominant bunker fuel.

It is already the second most popular product by sales volume in Singapore, and on Tuesday Ship & Bunker reported that the latest preliminary data from the Maritime and Port Authority of Singapore (MPA) showed that June sales of 500 cSt represented its highest ever proportion of overall sales at 20.5 percent.

Ship & Bunker News Team
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