The January sales volumes in Singapore, the world's top marine refuelling hub, were up by 8% from last year and 1% higher from December, data from the Maritime and Port Authority of Singapore (MPA) showed.
Since the start of 2020, International Maritime Organization (IMO) rules capped the sulphur content of ship fuel at 0.5%, from 3.5% previously, unless they are equipped with exhaust-cleaning systems known as scrubbers.
Sales of IMO-compliant low-sulphur fuels represented 83% of the overall January sales volumes totalling a record 3.743 million tonnes, Reuters calculations showed.
"The HSFO (high-sulphur fuel oil) share should probably bottom-out around current levels at about 17% of total," said JBC Energy in a note on Friday.
A total of 3,591 ships called at the Singapore hub in January for bunkers, up 1% from last year but down from a nearly seven-year top of 3,826 ships in December.
Vessels loaded an average of 1,257 tonnes each of bunkers in January, the highest since August 2018, the data showed.
Buying interest for IMO-compliant fuels surged around the start of the year as buyers rushed to secure larger quantities of supplies and as ship operators with delayed scrubbers were forced to purchase low-sulphur fuels in order to comply with the new rules, trade sources said.
Since then, however, Asia's market for very low-sulphur fuel oil (VLSFO) has retreated from its record highs near the start of the year, as demand crumbled under seasonal factors and an epidemic in China, while supply expectations improved.
"These (bunker sales) levels are likely to slip in February and March on account of COVID-19," said JBC referring to the coronavirus outbreak.
Cooling VLSFO prices were also seen as an early sign of stabilizing market fundamentals after months of volatility sparked by the IMO's rules.
Singapore's January sales volumes were led by sales of 380-centistoke (cst) VLSFO, totalling 2.218 million tonnes, down 2% from December but well above the 4,000 tonnes sold at the same time last year.
Sales of marine gasoil (MGO) with a maximum 0.5% sulphur content and low-sulphur MGO with a 0.1% sulphur limit both climbed to record highs in January totalling 109,000 and 446,000 tonnes, respectively, according to the data.
By contrast, 380-cst HSFO, the most popular bunker fuel prior to the IMO rules, fell to 632,000 tonnes in January - the lowest in over seven years - or as far as available records show, according to the MPA data.
(Reporting by Roslan Khasawneh; Editing by Himani Sarkar and Sherry Jacob-Phillips)
By Roslan Khasawneh