Asia/Pacific News
Singapore: 'Intense Debate' Over Gasoil Term Price Setting
Disrupted demand patterns and volatile pricing for fuel oil grades ahead of the International Maritime Organisation (IMO) sulfur rule change could prompt "intense debate" when it comes to setting the term price for gasoil, price reporting agency SP Global Platts has said.
The gasoil term price negotiation, from which a bunker price is derived, will take place against a range of factors fuelling uncertainty.
"The annual gasoil term price discussion for gasoil cargoes loading in East Asia in 2019 from key regional export hubs could see intense debate over late October to November," the agency said citing trade sources.
A higher-than-expected prompt cash differential, demand uncertainty in the later half of next year from the impact of IMO2020 and a push by China away from diesel and towards gasoil all contribute to the situation.
Currently, Platts data for Singapore has higher specification 10 ppm gasoil riding above the average while the lower specification 500 ppm grade is positioned significantly below.
Taiwan's Formosa Petrochemical Corp's annual term gasoil agreement is seen as a bellweather price in that it is "closely watched in east Asia, and will likely set the tone for other regional suppliers' 2019 term prices", according to Platts.
From the start of 2020, the sulfur cap bunker fuel falls to 0.5% with the majority of the global fleet switching to marine gasoil over the short to medium term.
