Poor market sees 2 India fuel oil tenders scrapped

SINGAPORE, Aug 18 (Reuters) Hindustan Petroleum Corp. Ltd. (HPCL) and Indian Oil Corp. (IOC) cancelled export tenders for September-loading fuel oil due to low price bids in a bulging Singapore market, traders said on Friday.

The move came on the back of two other Indian tenders to sell high-density, high viscosity cargoes, which were called off earlier this week as Singapore stocks stayed at near-capacity levels of 15 million barrels for a third-straight week.

HPCL had offered a 40,000-tonne cargo of 380-centistoke (cst) cargo, with a 4.5 percent sulphur content and 0.998 kg per cubic metre density, for Sept. 5-9 loading from Mumbai.

This is the second time that a tender for this cargo has been called off.

IOC offered a 30,000-tonne parcel of 380-cst, with a 4.5 percent sulphur content and and 0.995 kg per cubic metre density, for Sept. 6-10 loading from Chennai.

''It doesn't take a genius to figure out that unless the Indians are prepared to sell at rock-bottom discounts, no one would be interested in the cargoes,'' a Singapore-based Asian trader said.

''Both parcels are high-density, high-viscosity and high sulphur and the market is already full of such materials. The signs were already there when the first two got cancelled. It remains to be seen whether any of the parcels will be reoffered.'' Traders said bids were heard at steep discounts of - a tonne to Singapore spot 380-cst quotes, on a free-on-board (FOB) basis, well below previously done levels at discounts of around - a tonne for a package of three July-September loading HPCL parcels done in June.

Players also had difficulty securing a medium-ranged tanker of 30,000-to-40,000-tonne capacity to transport the cargo, traders added.

Kochi Refineries Ltd. (KRL) and HPCL called off two tenders for August/September parcels totalling 65,000 tonnes earlier this week.

The heavily supplied Singapore market has seen inventories swell to near-capacity levels of 14.964 million barrels (2.3 million tonnes) for a third week following huge Western inflows.

August supplies from the West are expected at 3.3-3.4 million tonnes, the heaviest monthly flow for over two years for a third consecutive month. September Western flows are expected at around 2.2-2.3 million tonnes.

Indian refiners have added to the glut in Singapore, selling well above average volumes since April. September volumes totalled 215,000 tonnes, a threefold increase year-on-year.

In total, Indian refiners have sold 2.15 million tonnes so far this year, above 2005's overall total of 1.83 million tonnes, even before the peak end-of-year export season.

REUTERS CS DS1132