BIMCO has developed a monitoring service for bunker prices, with data provided by MABUX, which is now available to all BIMCO members here.
The new interactive graphs allow price fluctuations in the major bunkering hubs of Singapore and Rotterdam to be tracked. They will show the bunker prices for 380cST HSFO (high sulphur fuel oil) and MGO LS (marine gas oil low sulphur), both in USD per metric ton, as well as the spread between the two fuel types, with data available since June 2017. The spread between the fuel types is of keen interest to the shipping industry as the 2020 Sulphur cap looms ever closer.
380cST HSFO is chosen over 180cST HSFO as the latter is becoming increasingly less popular among ship-owners and has only limited availability in both Singapore and Rotterdam. MGO LS is chosen over VLSFO as there is currently neither a consistent demand nor a standard product of VLSFO (very low sulphur fuel oil) and its price is therefore not yet being published on a regular basis. As 1 January 2020 approaches, demand is likely to grow as VLSFO will be the cheapest compliant fuel for ships without an exhaust gas scrubber. VLSFO will be added to the graphs once reliable price information on a standard product can be obtained.
Fuel spread will determine whether an investment in scrubbers will pay off
The price difference between high and low sulphur fuel will be the determinant factor as to whether an investment in scrubbers will pay off for shipowners. Scrubbers allow for the continued use of the cheaper HSFO, whereas those who have opted not to install one will have to rely on a more expensive low sulphur fuel. With the new tools enabled by BIMCO, members can now follow the bunker prices and spreads as they unfold in real time and track the payback time for a scrubber investment.
“All stakeholders in the shipping industry will want to keep a close eye on the development of high sulphur and low sulphur fuel prices as the deadline for compliance approaches. With 83 days left until the new regulation comes into force, the days of speculation about the fuel spread are drawing to a close and shipowners must square up to the added cost,” says Peter Sand, BIMCO’s Chief Shipping Analyst.
As highlighted in the latest BIMCO Bulletin, worsening market conditions in dry bulk as well as container shipping will likely limit how much of the additional fuel costs shipowners will be able to pass onto their customers, as this will depend on the market balance in the sectors.
“Adding to the worsening of the fundamental balance, the added fuel costs due to the 2020 sulphur cap, paints a disturbing picture for the rest of 2019 and 2020 for container shipping. As we have also noted in the dry bulk analysis, the oversupply of capacity is likely to make it difficult for shipowners to fully recover the additional fuel costs,” reads an extract of the September issue of the BIMCO Bulletin.
In a previous edition of the Bulletin, MABUX highlighted that the bunker market was lagging behind the shipping industry in their preparations for the implementation of the Sulphur Cap. MABUX estimates that an additional 1.5 million barrels per day of distillates will be needed over the next two to three years, and highlights a concern over the number of ports which offer VLSFO. The shipping industry cannot by itself ensure a smooth transition to low sulphur fuels and is reliant on the refining industry to ensure that they can meet the new demand.
The interactive graphs can be found in the market reports section of the BIMCO website and allow members to hover over the graphic to see prices on a daily basis as well zoom in on certain dates as demonstrated in the video below.
The market reports page is accessible to all BIMCO members and on top of the new graphs offers third party market reports on a range of topics as well as fleet development graphs for the major shipping sectors.
BIMCO will also be holding four seminars on the new sulphur regulation focusing on the technical and regulatory aspects of the 2020 sulphur cap. These are one day courses held in Tokyo, Dubai and Istanbul between the 21 and 30 October. More information about these can be found here.