The lower volumes were due to softer demand from utilities, as the country’s electricity network was disrupted by devastating floods that wrecked the country over the past month, they added. The state firm bought up to 10 cargoes of high-sulphur 180-centistoke (cst) fuel oil, of 65,000 tons each, from Middle East trader Bakri and FAL Oil at undisclosed price levels on a cost-and-freight (C&F) basis.
“Demand from Pakistan this time round hasn’t been great because of the floods that has damaged some power generation plants, impacting electricity consumption to the point where they had to defer delivery of some low-sulphur fuel oil cargoes,” a Singapore-based Asian trader said. “Also, the Middle East fuel oil market has been amply supplied and that probably meant that transaction levels weren’t great and competition for the tender must have been quite stiff, especially since both FAL and Bakri both ended up with the same number of cargoes.”
PSO last bought up to 1.025 million tons of fuel oil for August to October delivery into Karachi at premiums of $16.00-$18.00 a ton to Middle East spot quotes, C&F. Most of Pakistan’s fuel oil supply comes from the Middle East, which has been amply supplied in the past month, on increasing volumes from Saudi Arabia and Iran.
September volumes from the kingdom stand at 500,000-550,000 tons, up from 300,000-350,000 tons for each of the past two months. Volumes from Iran are also ample as excess barrels are stored on board Very Large Crude Carriers, with at least two 270,000-ton supertankers being used as storage at any one time.
East Asia is also heavily supplied by Western arbitrage flows for October, notionally estimated around 3.8 million tons, the highest volume in three months and up from 3.4-3.5 million tons for September.
