Fuel oil cargo fails to offload in SA

SINGAPORE – Western trader Mercuria has been forced to float a 50 000-tonne fuel oil cargo just off South Africa, after failing to get clearance to discharge the cargo into storage tanks there, shipping sources said yesterday.

The medium-sized crude oil tanker, the New Conquest, which can double up as a clean petroleum product tanker, arrived at Saldhana Bay, on September 15, after loading at the US Gulf Coast a port agent said. The cargo was initially slated for discharge in Singapore.Mercuria was not immediately available for comment when contacted.”The tanker was already fixed for Singapore, but because market fundamentals changed, and they couldn’t find a buyer, they tried to discharge the cargo into their storage tanks here,” said a Saldhana Bay-based shipping source.Demand from utility buyers in China, Asia’s largest fuel oil buyer, for cracked cargoes has been very poor since July, when the market sank into its worst-ever slump that saw differentials on the benchmark 180-centistoke grade and its crack spreads sliding to record-low discounts.Singapore commercial stock levels had also been at near-capacity levels of about 15 million barrels (2,31 million tonnes) for most of August, forcing fuel oil traders to take up floating storage as temporary storage facilities.”For whatever reason, they miscalculated, and were not confident of placing that cargo, so rather than come to Singapore and get stuck with paying demurrage or finding alternative storage space, they just decided to bring it here,” the shipping source said.Despite holding significant crude oil tank storage at Saldhana Bay, which has about 45 million barrels of capacity, Mercuria was unable to offload its fuel oil cargo.Shipping sources said this was because the firm’s contract with the storage operators there was restricted to crude oil.Shipbrokers said demurrage for a Panamax was valued at about US$32 000 daily.A port source there said Mercuria was expected to attempt to sell the cargo into the South Africa’s Durban bunker market.Nampa-ReutersThe cargo was initially slated for discharge in Singapore.Mercuria was not immediately available for comment when contacted.”The tanker was already fixed for Singapore, but because market fundamentals changed, and they couldn’t find a buyer, they tried to discharge the cargo into their storage tanks here,” said a Saldhana Bay-based shipping source.Demand from utility buyers in China, Asia’s largest fuel oil buyer, for cracked cargoes has been very poor since July, when the market sank into its worst-ever slump that saw differentials on the benchmark 180-centistoke grade and its crack spreads sliding to record-low discounts.Singapore commercial stock levels had also been at near-capacity levels of about 15 million barrels (2,31 million tonnes) for most of August, forcing fuel oil traders to take up floating storage as temporary storage facilities.”For whatever reason, they miscalculated, and were not confident of placing that cargo, so rather than come to Singapore and get stuck with paying demurrage or finding alternative storage space, they just decided to bring it here,” the shipping source said.Despite holding significant crude oil tank storage at Saldhana Bay, which has about 45 million barrels of capacity, Mercuria was unable to offload its fuel oil cargo.Shipping sources said this was because the firm’s contract with the storage operators there was restricted to crude oil.Shipbrokers said demurrage for a Panamax was valued at about US$32 000 daily.A port source there said Mercuria was expected to attempt to sell the cargo into the South Africa’s Durban bunker market.Nampa-Reuters