VLSFO pricing & availability needs careful watching

Integr8 Fuels has said that changes in bunker infrastructure, availabilities and pricing are all having a major impact on the transition to the new 0.50% sulphur cap regime, and that this was posing challenges to bunker buyers.

The process of switching infrastructure (storage and barges) from HSFO to VLSFO had been noticeably underway since September. There had been a significant strengthening and then weakening in HSFO prices. The next stage had now arrived, with buyers switching rapidly towards VLSFO. The impacts of this change-over were easy to see. There had been terminal congestion, barge delays, availabilities and price volatility.

Integr8 Fuels said that since October the quoted price of HSFO had fallen sharply, whereas the price of VLSFO in Rotterdam had been around $480-500/ton. VLSFO prices in Gibraltar, Fujairah and Singapore were rising fast and were well above the $540-560/ton range seen in October/November 2019.

This meant that quoted VLSFO prices were now around $230-240/ton above HSFO.

In some instances MGO prices were only a small premium to VLSFO

Currently, there was less than $10/ton differential between quoted prices for MGO and VLSFO in Singapore, down from around a $75/ton differential a couple of months previously.

The company said that there was no ‘quick fix’ here and issues would continue to arise well beyond the January 1st IMO 2020 start date.