Few spot bunker fuel offers have been heard in Japan since early March as suppliers and traders hold back inventory for term buyers ahead of refinery turnaround season that peaks in May, market sources said Tuesday, March 24.

“We are not even sure we can cover term demand,” a trader said. Refineries that are due to shut for maintenance in May and June have little to offer in the spot market until the turnarounds were over, sources said.

“At the start of next month we can buy bunker cargoes from refiners, but refineries’ stockpiling is behind schedule, thus they are not keen to sell in April and early May,” a trader said.

Suppliers were only able to offer marine diesel fuel during this time, he added.

“It is difficult to offer 180 CST and 380 CST bunker fuel. In April, we will decide how much to offer based on the volume we can get,” another trader said.

Traders said they were receiving few if any inquiries at present, and were unable to quote for 380 CST and 180 CST bunker fuel even if they did.

“We can try [to offer] small quantities of 200-300 mt but beyond 1,000 mt, we cannot,” a trader said.

The tight supply and resulting high prevailing prices were diverting demand to ports in neighboring countries, traders said.

“We are seeing more inquiries in South Korea and Hong Kong,” a Hong Kong-based supplier said.

Demand in Japan stems mainly from ships plying the Australia-Japan route, and bunker prices in Melbourne remain even higher than in Japan.

Platts assessed Japan 380 CST delivered bunker at $357.50/mt Monday, compared with $467.50/mt in Melbourne.

The current supply tightness is in stark contrast to a year ago.

“Last year Japanese refineries were shutting down due to age and lack of demand and they found it cheaper to import from Russia. Now they are struggling to meet demand,” a supplier said.

Demand over July-August will hinge on the requirements of power plants for fuel oil during the peak summer demand period for electricity to run air conditioners, traders said.