Middle East trader Gulf Petrochem made an unexpected foray into the Asian fuel oil market by winning a semi-term tender for four cargoes, totalling up to 120,000 tonnes, from India, traders said yesterday.
The UAE-based trader, which is not a regular participant in Asian fuel oil spot tenders, was awarded the four 380-centistoke (cst) parcels at higher price-levels, reflecting the tightly-supplied market in both the Middle East and East Asia.
"It's certainly a surprise that Gulf Petrochem turned out to be the winner of the tender. Even their presence in the Middle East market isn't very big, they trade 40,000-50,000 tonnes of mostly bunkers in a month," a Middle East-based trader said.
"But, like everyone else, they could be affected by the supply tightness, particularly of on-specification bunkers grade 380-cst due to the lack of exports from Iran."
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The four 30,000-tonne cargoes, for loading from August to November from Vizag, were purchased from Hindustan Petroleum Corp Ltd at discounts of $14.00-$15.00 a tonne to Singapore spot quotes, up from minus $15.00-$16.00 previously.
HPCL sold another similar parcel, for August 18-20 lifting from Mumbai, to Chemoil at similar price levels.
All five cargoes are expected to be delivered to the Middle East, mainly for the Fujairah marine fuels market, traders said.
Fuel oil cargoes loading from the eastern Indian port of Vizag usually flow east to Singapore instead of west to the Middle East, they added.
"The landed cost of the cargoes is higher than just the difference in the price-level, due to higher freight and that shows just how short the Middle East market is of on-spec 380-cst," another trader said.