Traders attributed the rare booking to the pervasively tight market for on-specification cargoes in East Asia that has kept cash differentials and timespreads at strong levels for over a month.

“It’s rare on three counts — that it is PetroChina bringing a Rotterdam-origin cargo, it is booked that far ahead and that the freight is well above prevailing levels,” a Singapore-based Western trader said.

“But it’s still a little early to be definitive that it will actually get fully-fixed and land here, as it is that far ahead and most of the market are looking at December arrivals still,” the trader said.

The Chinese major has provisionally chartered the Very Large Crude Carrier (VLCC) Kazimah II to load 275,000 tonnes from Rotterdam in Dec. 5-10, with freight at $3.9 million, or about $14.50 a tonne.

Asia’s largest fuel oil trader by volume, PetroChina typically gets most of its 800,000 to 1 million tonnes supplies from the Caribbean and the U.S. Gulf Coast, as well as some ad-hoc barrels from spot offers by Indian and Middle Eastern refiners.

Its main outlet is the Singapore marine fuels market, the world’s largest with about 3.5 million tonnes of demand each month, of which PetroChina has a market share of 20-25 percent, trading from its storage terminals in the city-state that have a capacity of 500,000-550,000 cubic metres.

1ST JAN-ARRIVAL PARCEL SEEN BOOKED

The booking is the first January-arrival arbitrage lot from the West that was seen booked, according to Reuters data, ahead of even Caribbean-origin parcels that are usually seen booked before European-origin ones due to the longer voyage.

The $3.9-million freight is also much higher than that of the last booking for a similar voyage — a December-arrival cargo at $3.4 million.

The West-to-East arbitrage window is closed based on the freight for the booking, yielding a buffer of $9.50-$10.00 a tonne, with January’s East-West (E-W) spread at $33.50 and viscosity spread at $9.25.

However, the window is wide open for December arrivals, with a buffer at $14.50-$15.00 a tonne, while freight was pegged at $3.4 million, December E-W at $35.75 and the viscosity spread at $8.50.

Despite this, December bookings remained low, with about 2 million tonnes booked so far, well below the more than 4 million tonnes for each of the preceding two months.

This is mainly due to low export volumes from Russia, the main supplier of fuel oil to Europe, where a more punitive tax regime has been imposed on its domestic refiners from Oct. 1, as well as heavy maintenance that started in September.

The East Asia market has been persistently strong for over a month, due to the shortage of on-specification grades, keeping spot cargo premiums at above $10.00 a tonne to Singapore spot quotes for more than two weeks.