Asia/Pacific News
Indian Fuel Oil Exports to Sri Lanka Leave Avails Tight in Mumbai
A recent increase in Indian fuel oil exports to Sri Lanka is leaving its local bunker market in Mumbai short of product.
The fuel oil exports are being taken to meet growing demand from container lines in Colombo, where demand currently stands at about 50,000 mt/month, local market sources told Ship & Bunker this week.
One Indian refiner is said to be exporting all of its fuel oil to Colombo rather than offering any to the bunker market in Mumbai. Fuel oil availability across the west coast of India is now running dry because of less supply from refineries.
"We've not been getting product," an Indian source said.
"Over the past few months our customers have slowly been stopping buying at Mumbai because of the uncertainty of supply."
VLSFO delivered at Colombo has stood at an average premium of about $36.50/mt to Mumbai over the past month, according to Ship & Bunker pricing. That compares to an average premium of about $17.50/mt over the past 12 months.
India charges a goods and services tax of 5% on bunker sales at its ports. With the fuel oil being exported rather than sold as bunkers, the Indian government loses revenue on these sales as exports do not attract any GST.
One source in Sri Lanka suggested the Indian cargoes may die down again in time as product from elsewhere in the region becomes cheaper.
"Yes, fuel oil imports from India have increased – this is mostly because it's commercially more viable now to import from India," the source said.
"But this is more temporary, as we are seeing imports from Singapore becoming more competitive again – hence it may again shift to Singapore."
