Global energy and commodity price reporting agency Argus Media on Wednesday (13 March) provided an industry update regarding a milestone reached for reported bunker deals in Singapore:
Tuesday 12th March saw 45 deals reported into the Argus Delivered Bunkers (ADB) assessment process for Singapore (36 for HSFO, 8 for MGO 0.1%, 1 for LSFO 0.1%). This surpassed the previous record of 39 deals set on 9th November.
HSFO 380cst was assessed at $434.49/mt, MGO 0.1% at $612.57/mt and IMO2020 compliant LSFO 0.5% at $572.50. The later was assessed by considering the LSFO 0.1% deal price and a market survey which indicates offers at a $40 discount to MGO. Argus is the only price reporting agency publishing prices for LSFO 0.5% delivered bunker fuel that can be used for signing contracts that extend into 2020.
Buyers of delivered LSFO 0.5% must currently pay a $96 premium over the 0.5% marine fuel cargo price, which Argus assessed at $476/mt that day. Such a bunker premium may sound high, but that is the current offer price on a spot basis due to a lack of barges carrying the grade. This spread is likely to reduce in 2020 as demand and supply increase.
With premiums/discounts to traditional benchmarks likely to vary considerably as the market adjusts to IMO2020 compliant fuels, Argus offers a refreshing and accurate alternative. Signing term contracts referencing ADB ensures that buyers and sellers know with certainty that the contract will settle on the fair price for that fuel on a delivered to ship basis.
Argus assesses delivered bunker fuel prices in Singapore based on a Volume Weighted Average (VWA) of physical spot deals reported by 7pm, excluding price outliers and deals that fall outside the range of 4-12 days and 500-3,000t for Fuel Oil and 50-500t for MGO. No other price reporting agency assesses the market in this way or with such high quality underlying deal data.
Published: 13 March, 2019
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