July 02, 2018 [Hellenic Shipping News] - Vitol Singapore has no plans to renew its tank storage lease for fuel oil at Oiltanking Seraya in Singapore with a capacity of around 200,000 cu m, once the lease expires at the end of June, market sources said this week.
This follows other fuel oil trading companies, which have given up their landed storages since last year.
BP Singapore had exited landed fuel oil terminals by the end of December last year, S&P Global Platts reported previously.
Glencore had given up its storage at Helios terminal by the end of April, while Repsol also did not renew its storage lease at Tankstore in end-April, industry sources said.
Fuel oil traders said it is getting difficult to make profits while holding landed storage tanks as the bunker market remains largely weak due to fierce competition.
Those traders typically buy fuel oil cargoes, store them at terminals and sell them in the bunker market on an ex-wharf basis.
The Singapore ex-wharf 380 CST bunker premium averaged $2.20/mt to the Mean of Platts Singapore 380 CST high sulfur fuel oil assessment over January 2-June 28 this year, Platts data showed. In comparison, the premium averaged $2.86/mt in 2017. Landed tank storage rates work out to $3-$3.5/mt a month, traders said. “There are too many sellers,” a trader said.
Meanwhile, even though Vitol is giving up storage at the Oiltanking Seraya terminal, “there will be no problem in taking tanks back because a lot of tanks are available in Singapore,” a trader said.
Apart from Oiltanking Seraya, Vitol is still using the Tanjung Bin terminal in Malaysia, sources said.
The current steep backwardation has been discouraging traders to hold storage tanks as well. Singapore 380 CST HSFO market has been in backwardation since April this year, Platts data showed.
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