HSFO supply crunch has narrowed the price gaps to VLSFO in major European bunker ports, sources told ENGINE.

A total of 1,925 refineries across Europe experienced outages in October, up from September when the figure stood at 1,584, according to Rystad data. Moreover, a major Russian HSFO-producing refinery has recently been offline. While the EU stopped importing Russian fuel oil after sanctions took effect last year, any disruptions in Russian supply add further strain to global HSFO availability.

In the ARA region, a refinery initiated a shutdown of seven refining units at the end of September as part of a six-year maintenance cycle, exacerbating bunker supply tightness in the area. This limited supply comes at a time when the ARA hub has seen increased HSFO demand as ships bunker bigger quantities for longer voyages around Africa.

Shipping firms have been rerouting vessels around the Cape of Good Hope since mid-December 2023 to avoid the conflict-prone Red Sea.

Also, last week, Neste reported a fire at its Rotterdam refinery, which triggered a temporary shutdown that could last several weeks. The fire has impacted the refinery’s renewable diesel production capacity, prompting Neste to revise its total sales volume projections for 2024

A Neste spokesperson confirmed to ENGINE that the refinery only produces renewable diesel. Since the refinery exclusively produces renewable diesel and not bunker fuels, the incident is expected to have no impact on the bunker fuel supply.

Rotterdam’s Hi5 spread reached a record low of $5/mt in October but has since widened to $44/mt. Despite this increase, it remains well below Hi5 levels in other ports, such as Fujairah ($118/mt), Singapore ($103/mt), and Houston ($85/mt). And even with the recent uptick, Rotterdam’s Hi5 spread is still significantly narrower than six months ago, when it stood at about $119/mt.

Bunker availability in the ARA region is currently tight across all grades. HSFO is particularly constrained, with recommended lead times of 7-10 days, while VLSFO and LSMGO require shorter lead times of 5- 7 days.

Gibraltar’s Hi5 was the narrowest in the last week of October. It ranged between $2-12/mt between October 23 and 1 November. HSFO was very tight in Gibraltar during the period with suppliers unable to offer very prompt delivery dates for the grade.

Coming into this week, HSFO supply pressures have eased in Gibraltar with the arrival of replenishment cargoes, a trader told ENGINE. As a result, lead times have reduced to 3-5 days compared to 5-7 days last week.

By Manjula Nair

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