(Bloomberg) -- The cost of storing fuels at the Asian hub of Singapore has surged as onshore tanks rapidly swell to near capacity amid crashing demand for everything from diesel to gasoline due to the coronavirus.
For those that managed to snap up some space recently, the price of storage for around two to three months has climbed at least 38% since the outbreak, according to two traders with knowledge of the matter. No more new leases are being offered in Singapore with capacity limits set to be tested in coming weeks, prompting a surge in interest for ships to store fuels amid a rising glut.
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Tanks across the Singapore Straits, which includes Malaysia and Indonesia, can hold about 140 million barrels, according to Steve Puckett, executive chairman of energy consultancy Tri-Zen International. Storage in the city-state was at about 70% to 80% of capacity in mid-February, Puckett said, as the outbreak began sweeping through Asia and other parts of the world.
The majority of Singapore’s onshore tanks are leased long term, typically for about 12 months, with the remainder used for shorter periods. The cost of renting storage short term is now at $6.90-$9.40 a cubic meter per month, or $1.10-$1.50 a barrel, according to four traders who asked not to be identified. That compares with $5-$6.30 a cubic meter at the end of January.
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The long-term storage cost for 2020 was at about $5 a cubic meter per month, according to the traders. Before the virus, the price of storing fuel on an annual basis was expected to average $4-$6 a month over the next five years, with rates suppressed partly due to an abundance of storage space throughout the region, Puckett said. “Clearly times have changed,” he added.
Major Singapore onshore storage operator Royal Vopak declined to comment on rates or demand. Other providers Oiltanking Singapore Ltd., Universal Terminal and Tankstore didn’t respond to emails seeking comment.
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