Singapore LSFO arbitrage arrivals from Europe seen lower in Nov amid high freight

Low sulfur fuel oil (LSFO) arrivals from Europe to Singapore are expected to decline in November as persistent high freight rates hinder the arbitrage opportunity, despite the record-high price spread between Singapore and Rotterdam. The world's largest bunkering hub is projected to receive around 1.3 million-1.5 million metric tons LSFO in November, down from approximately 1.6 million-1.7 million mt in October, according to multiple Singapore-based traders.

The high freight rates make the Europe arbitrage difficult, particularly for larger ships. A trader noted that Brazilian inflows are also lower, and some oil may be directed towards Fujairah. The spread between Singapore marine fuel 0.5% cargo and FOB Rotterdam 0.5% barge assessments widened to $192/mt on October 28, up from $172/mt on October 27 and representing a 16.5% increase over the past two weeks, marking the widest level since Platts began tracking the data in April 2022.

The East-West spread is considered "super wide," but freight remains extremely high. Tighter supplies of very low sulfur blending components have resulted from the closed arbitrage from Europe, which will further tighten the marine fuel market. Most November arrivals are expected to be concentrated in the first half of the month, tightening second-half supplies.

Freight costs remain significantly higher, leading some traders to have already finalized November delivery deals, with no reported cancellations yet. Overall, November is expected to show a drop compared to October, although the change may not be substantial.