Argus Media: LSFO bunker demand in Singapore port to rise from October

Global energy and commodity price reporting agency Argus Media on Wednesday (25 September) provided a marine fuels industry update related to the Singapore bunkering sector:

An increasing number of shipowners are expected to transition to low-sulphur marine fuels from October, three months ahead of the International Maritime Organization's (IMO) sulphur cap implementation date of 1 January 2020.

Some bunker buyers have mentioned that by starting the transition early, there is less need to physically clean out vessels' tanks. Diluent can be used together with low-sulphur fuel oil (LSFO) to dissolve any leftover sludge and clean the tank walls. This might see actual sulphur levels slightly above 0.5pc for now but should not be an issue anymore by 1 January 2020.

"Our bigger ships have six bunker tanks, so we are transitioning them out of high-sulphur fuel oil (HSFO) service and into LSFO," according to one buyer. "But we do not plan to burn LSFO yet, unless we are sailing into the Chinese emission control areas," said the same buyer.

Japanese shipowners have already started lifting LSFO this month, while Taiwanese buyers seem reluctant to buy before November, according to a bunker trader. Some shipowners are indicating they will hold off until the middle of December as long as HSFO remains cheaper.

With little over three months to go before the 0.5pc sulphur cap takes effect globally, shipowners face a delicate timing issue as to when to start transitioning into the new era of cleaner fuels. The price spread between delivered LSFO and HSFO yesterday was assessed at $126.65/t, according to Argus data.

Continuing to burn HSFO until the end of this year thus represents large cost savings for shipowners. Capesize vessels can take up to 4,500t, while larger container ships are able to bunker up to 10,000t.

Argus has reported a growing number of LSFO deals, with one to two being collected on average each week alongside bids and offers to support the price assessment for this fuel.

Source: Argus Media
Published: 26 September, 2019