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China-based Southern Petrochemical Co. has reportedly acquired a supertanker to use as floating storage to trade high sulphur fuel oil (HSFO) in Singapore.

The Nan Fang 3, a very large crude carrier (VLCC), has already arrived in Singapore and will be positioned at Hin Leong's anchorage, market sources said.

The tanker will also reportedly be able to blend fuel oil to meet marine fuel specifications, according to local traders.

Singapore is the world's leading bunker port by volume with between 2.6 and 3.1 million tonnes sold on a monthly basis. Overall fuel oil volumes transacted average around 5 million tonnes per month.

Southern Petrochemical's entry into physical fuel oil trading follows the decision earlier this year by another trading house Noble Group to launch a fuel oil desk in Singapore.

Noble began its fuel oil business in April after reportedly hiring former Trafigura traders who left the global trading house over the past 12 months.

It was thought that Noble Group's entry into the fuel oil market was linked to the expectation that refinery upgrade projects in Asia and Europe could potentially lead to high trading margins due to tightening supplies of residual fuel.

Noble has also reportedly been seeking a long-term storage lease as part of its fuel oil trading strategy.

Towards the end of last month Southern Petrochemical sold an 80,000-ton parcel of Saudi A960, or straight-run fuel oil, to Sinochem International Ltd., which was then re-exported to Singapore.

Based in Guangzhou, Southern Petrochemical has over 700,000 cubic meters of storage and 12 bunker barges in southern China.