Japan 380 CST bunker fuel was assessed at $311.50/mt last Friday, a 7-month low, amid lackluster spot demand since late May. It was last assessed lower on November 28, 2016, at $309.50/mt for prompt delivery in Tokyo Bay. While the Japanese term market remains well-supported by high demand and stable supply, spot demand has been soft.

“We are satisfied with the demand level seen from our term clients and hence, we are not keen to offer in the spot market, especially in view of the recent low prices,” said a trader who handles term contracts primarily.

The situation, however, looks bleak for traders focusing on the spot market.

“The market has been quiet with few inquiries seen each day since the beginning of June,” a trader said. “We have been offering at aggressive prices. However, the effort proved to be futile in drawing back demand.”

Other sources shared similar sentiment, with one trader saying he was concerned about the low demand. “At this level [of demand], I am worried about my business,” he said.

“We have to fulfill monthly sales quota set by the refiners we work with. Failure to meet that quota means we will be allocated less bunker fuel to sell, which in turn will worsen our business circumstances,” a bunker spot trader said.

“This explains the very intense competition happening currently. Those who are not keen to offer would have already fulfilled their monthly quota, and for those who have not yet done so, you see them struggling to sell,” he added.

Sources attributed low vessel volume during the summer as well as competition from neighboring ports in South Korea and China as the main reasons for the weak market in Japan.

Source: Platts