Japan’s shippers close to concluding Oct-Mar term bunker fuel contracts

Japan’s three major shipping companies are close to finalizing, or have finalized, term contracts with suppliers for the delivery of bunker fuel over October 2017-March 2018, trade sources said this week.

Mitsui OSK Lines, “K” Line and NYK Line are at various stages of the term tender process to buy bunker fuel at selected global ports, but it was heard this week that the shippers would be wrapping up the Asia portion soon, with term prices roughly the same across the three major shippers.

“K” Line, MOL and NYK traditionally have two six-month term cycles — apart from the October-March cycle, they also have an April-September contract.

For Tokyo Bay, traders said term prices of 380 CST bunker fuel for volumes less than 500 mt were averaging at a discount of $2.50/mt to the monthly average of Platts Bunkerwire Japan assessments, on a delivered basis. For larger volumes of 1,000 mt or more, term prices were heard at an average of minus $3.50/mt to minus $4.50/mt, priced to the same basis.

Meanwhile, for Singapore term bunker fuel, sources said the 380 CST grade was settled at a discount of $1.50-$2.50/mt to the Singapore 380 CST delivered bunker fuel assessment.

“This time, term levels [for the Singapore 380CST bunker fuel portion] are better for traders, as the discount was narrower than before,” a source said Friday. It is understood that for the April-September 2017 term contract, 380 CST bunker fuel for Singapore was inked at a discount of minus $3/mt to minus $3.50/mt, basis the Singapore 380 CST delivered bunker fuel assessment.

Apart from Singapore and Japan’s Tokyo Bay, MOL, “K” Line and NYK are also seeking term bunker fuel supplies from other major Asian ports such as at South Korea, Hong Kong and China’s Shanghai port.

Sources said late Thursday that price levels for 380 CST bunker fuel for the South Korean term contracts were hovering at a discount of $7-$8/mt to the South Korea 380 CST delivered bunker fuel assessments, basis date of nomination. The 380 CST bunker fuel term levels for Hong Kong and Shanghai could not be ascertained Friday.

“Discussions should be finalized by next week however, it is already the last week of September [by then] and nomination has to be done five days before the ETA,” a source said this week.

Japanese shippers contacted this week declined to comment on their bunker fuel term volumes, but sources estimated that on average the three major Japanese shipping companies lift a total of 300,000 mt/month on a term basis from Singapore.