Log in

Login to your account

Username *
Password *
Remember Me

Digital Editions

mag archive 230

News

news archive 230px

Very low sulphur fuel oil (VLSFO) prices at the world’s largest bunkering hub rose 30% between 2 December and 2 January, the shipping organisation highlights.

According to BIMCO, the VLSFO-HSFO spread in Singapore is some $340 per metric tonne (p/mt) – the third highest level since low sulphur fuel became widely available. The spread between low sulphur marine gasoil and high sulphur fuel oil, at $346 p/mt, is the highest level since 2014.

BIMCO notes that translating the VLSFO-HSFO spread into shipping terms, a ship burning 20 metric tonnes of fuel per day will effectively double its daily fuel costs from $7,400 per day to $14,200 per day when switching from HSFO to VLSFO

While VLSFO has been sold at a discount of $20-$60 p/mt to LS MGO at Singapore, BIMCO says that this discount has disappeared at present, with both products being sold at around $700 p/mt.

As BIMCO points out: ‘Bunker suppliers are seemingly leveraging the IMO 2020 regulation to their benefit.

‘As the industry moves away from HSFO, the suppliers can command a substantial price premium for the low-sulphur fuels. Low supplies of low-sulphur fuels could also affect the pricing mechanisms locally.’

The organisation also highlights the impact on freight rates, noting that with supply growth outpacing that of demand in all the major shipping markets, shipowners may not be in a position to pass on all the costs associated with IMO.

‘If current fuel prices are anything to go by, then the widening spread could have dire consequences for many shipowners, as many must carry the additional costs themselves,’ BIMCO cautions.

Share |