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Tue 10 Mar 2009, 08:06 GMT

Iran secures fuel oil export deal


Straight-run 280-centistoke cargo expected to be destined for Singapore.

Iran has secured a deal to supply up to 400,000 tonnes of 280-centistoke (cst) fuel oil per month in 2009, traders report.

Market sources said the supply deal for Iranian straight-run grade, 280-cst had been concluded at a premium of between US$7 to US$8 per tonne to Middle East quotes on a free-on-board (FOB) basis, approximately 60 percent higher than a year ago. One of the purchasers is reported to be state-owned oil trader Zhuhai Zhenrong Corp.

The higher deal premium appears to be partly due to a decrease in the availability of fuel oil for export. Stong domestic demand for power generation during the Winter season has already led to National Iranian Oil Company (NIOC) halting spot exports of heavy fuel during the first three months of 2009.

The latest 400,000-tonne deal is steady to contracted volumes the previous year. However, the lack of availability of 280-cst from Iran in recent months has forced traders to source alternative blending materials from Russia and the Far East at competitive price levels.

Traders said the cargo would probably land in Singapore at a premium of about US$9 a tonne to Singapore spot 180-cst quotes.

Apparent buying interest from China for the cargo follows news last week that imports of fuel oil into China increased by approximately 0.52 million tonnes in February 2009 as stockpiles accumulated ahead of a fuel tax increase on January 1st are slowly drawn down.

According to data released by the General Administration of Customs, fuel oil imports rose by 33 percent from 1.58 million tonnes in January to 2.1 million tonnes last month.

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