Business

Argus Media: HSFO oversupply widens scrubber spread

HSFO in Rotterdam has declined by almost $20/t since 26 March, broadening the bunker spread from under $90/t in March to $111/t yesterday, reports Argus Media.

Published

4 years ago

April 15, 2021

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George Collard, Nana Kutin, and Enes Tunagur of global energy and commodity price reporting agency Argus Media on Wednesday (14 April) published a summary on the factors behind the fall in HSFO prices and possible implications for the bunker market:

Ample supply of high-sulphur fuel oil (HSFO) in northwest Europe has widened the "scrubber spread" between the price of 3.5% sulphur product and IMO-compliant 0.5% fuel oil.

The price of delivered HSFO in Rotterdam has declined by nearly $20/t since 26 March, but 0.5% fuel oil has risen by $5/t over the same period, broadening the spread between the two grades from under $90/t in late March to $111/t yesterday, the widest in a month.

Abundant supply has weighed on HSFO margins to crude in recent weeks, with the notional discount to front-month Ice Brent futures hitting an 11-month low of $10.96/bl on 9 April. A flurry of cargoes taking HSFO from the Baltic Sea to the Amsterdam-Rotterdam-Antwerp (ARA) trading and refining hub has piled pressure on margins because export opportunities remain limited. Baltic Sea fuel oil exports to ARA reached a 17-month high of 1.33mn t in March, up from 915,000t in February, according to Vortexa data.

Fading transatlantic demand for Russian Baltic fuel oil drove the cargoes to northwest Europe. And this rise in inflows from the Baltics coincided with fewer arbitrage departures from ARA to Singapore, the world's largest buyer of marine fuels. Meanwhile, Middle East demand was the main supporter of European HSFO margins in March, with around 610,000t of fuel oil exported from ARA to the Middle East last month, the highest since at least 2018 according to Vortexa.

The bigger the discount for delivered HSFO to 0.5% fuel oil, the quicker the payback time for a shipowner who has purchased a scrubber. Scrubbers are marine exhaust gas cleaning systems that have allowed ships to continue burning HSFO since the IMO's 0.5% sulphur cap came into force last year. At the start of 2020, Rotterdam's scrubber spread was above $300/t. But when the onset of the Covid-19 pandemic triggered a collapse in transport fuel demand in March last year, the spread narrowed and spent most of 2020 under $70/t.

The price of 0.5% fuel oil fell significantly last March as bunker demand declined, but HSFO values received support from export demand for use in US cokers and for power generation in Asia. The narrowing spread last year led to scrubber demand dropping off after a rush of orders ahead of the IMO cap. According to data from shipping classification firm DNV GL, the number of ships fitted with scrubbers shot up in 2019-20, with over 4,375 in operation or on order globally at the end of last year, compared with just 731 at the end of 2018, but that tally will go up by fewer than 200 this year.

HSFO consumption in Rotterdam was strong in the last quarter of 2020 after ships retrofitted with scrubbers during the year returned to sea. But with few scrubber-fitted ships set to return to service this year, HSFO bunker demand may have peaked. Bunker demand in Europe has been weak this year, with HSFO supply in Dutch ports more than a third lower in January than in December, according to the latest data from Statistics Netherlands.

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Photo credit and source: Argus Media
Published: 15 April, 2021

Bunker Fuel

TMD Energy becomes first Malaysian bunker supplier to list on NYSE American

Straits Energy Resources’ subsidiary announces that its shares have been listed on 21 April, becoming the first Malaysian marine bunker supplier to achieve a listing on a major US exchange.

Published

8 hours ago

April 22, 2025

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TMD Energy Limited (TMD Energy), a Malaysia and Singapore-based provider of integrated marine bunkering services and a Straits Energy Resources Berhad (SER) subsidiary, on Tuesday (22 April) announced that its shares have been listed on 21 April and began trading on the NYSE American under the ticker symbol “TMDE”.

Dato’ Sri Ron Ho Kam Choy, Chairman, Executive Director, and Chief Executive Officer of TMD Energy, said: “We are proud to become the first Malaysian marine bunker supplier to achieve a listing on a major US exchange, reinforcing our position as one of the industry’s leading players.

“Leveraging Malaysia’s strategic location along major shipping routes including the Straits of Malacca and the South China Sea, as well as resilient demand for bunker fuel in the region and globally, we are well positioned for further expansion. On top of that, TMD Energy is also the first Malaysian company to list on the NYSE American.

“Our listing in NYSE American will help us to enhance our international profile, expand our reach, capture new markets, and deliver sustainable, higher returns to our shareholders.”

TMD Energy’s share price opened at USD 3.26 on Monday, rising to an all-time high of USD 4.12 on its market debut before closing at USD 3.63, which was 11.69% higher than its initial public offering (IPO) price of USD 3.25 per share. This gave the company a market capitalisation of USD 83.85 million (equivalent to approximately MYR 367.2 million) on its first day as a publicly listed company.

TMD Energy’s IPO was priced at USD 3.25 per share, and total gross proceeds (excluding the over-allotments) before deducting underwriting discounts and other related expenses were approximately USD 10.08 million (equivalent to approximately MYR 44.13 million).

Proceeds from the IPO will be used for the purchase of cargo oil; defraying listing expenses; and working capital and other general corporate purposes.

The company has granted the underwriter a 45-day option to purchase up to an aggregate of 465,000 additional shares to cover over-allotments at the IPO price, If the underwriter exercises their option to purchase the additional shares in full, the total gross proceeds before deducting underwriting discounts and other related expenses from the offering are expected to be approximately USD 11.59 million.

Dato’ David Yoong Leong Yan, Executive Director of TMD Energy, said: “Our debut on the NYSE American is a key milestone in our journey of growth. While continuing to drive strong organic growth, as part of our strategic growth initiatives, we remain focused on identifying and pursuing strategic mergers and acquisition opportunities that align with our long- term vision and strengthen our regional presence.”

Manifold Times previously reported SER announcing its proposal to list its oil bunkering segment via the listing and quotation of the ordinary shares in its 76.68%-owned subsidiary, TMD Energy, on the New York Stock Exchange American (NYSE American).

TMD Energy and its subsidiaries (TMD Energy Group) are mainly involved in marine fuel bunkering services specialising in the supply and marketing of marine gas oil and marine fuel oil to various types of ships and vessels at sea. In addition, the company provides vessel chartering services and vessel management services.

TMD Energy Group operates in 19 ports across Malaysia, with a fleet of 15 well-maintained bunkering vessels with capacities ranging from 540 dwt to 7,820 dwt, of which nine are double-bottom and double-hull vessels with an average cargo-carrying capacity of 4,200 dwt each. Its customers include ship owners and operators, shipping lines, logistics and freight companies, as well as oil and gas traders or brokers.

TMD Energy’s growth strategy includes expanding its market presence across Southeast Asia, growing its bunkering fleet, providing ship management services to external customers and diversifying its fuel offering to include eco-friendly alternative fuels such as biodiesel.

TMD Energy is part of SER, a Fortune Southeast Asia 500 company listed on the ACE Market of Bursa Malaysia Securities.

Photo credit: TMD Energy
Published: 22 April, 2025

LNG Bunkering

New MOL vessel to be supplied LNG bunker fuel in Japan before voyage to Australia

After departing from Saijo Shipyard, LNG fuel will be supplied directly to “Verde Heraldo” through shore-to-ship bunkering at Senboku Terminal of Osaka Gas, and is then scheduled to sail for Australia.

Published

8 hours ago

April 22, 2025

Admin

New MOL vessel to be supplied LNG bunker fuel in Japan before voyage to Australia

Mitsui OSK Lines (MOL) on Friday (18 April) said the naming and delivery ceremony for the LNG-fuelled Capesize bulker, which MOL ordered for JFE Steel Corporation, was held at the Saijo Shipyard of Imabari Shipbuilding.

The vessel was named the Verde Heraldo, which means “Green Pioneer” in Spanish, by JFE Steel President and CEO Masayuki Hirose. MOL executives including President & CEO Hashimoto were also on hand for the ceremony.

After departing from Saijo Shipyard, LNG fuel will be supplied directly to the vessel through shore-to-ship bunkering at the Senboku Terminal of Osaka Gas, and is then scheduled to sail for Australia.

The Verde Heraldo will sail under long-term transport contracts to supply raw materials for JFE Steel's mills, providing both reduced environmental impact and safe and reliable marine transport services.

About Verde Heraldo

LOA: 299.99 m
Breadth: 50.00 m
Draft: 18.436 m
Deadweight tonnage: 210,321 tonnes
Shipyards: Imabari Shipbuilding and Nihon Shipyard

Photo credit: Mitsui OSK Lines
Published: 22 April, 2025

Business

ENGINE: Adverse weather keeps bunker operations suspended in Zhoushan’s OPL area

Bunker deliveries at Zhoushan’s Tiaozhoumen and Xiazhimen outer anchorages have been suspended due to rough weather; some suppliers expect to fully resume operations in OPL area by 22 April.

Published

8 hours ago

April 22, 2025

Admin

Bunker deliveries at Zhoushan’s Tiaozhoumen and Xiazhimen outer anchorages have been suspended since Saturday due to rough weather, according to a source on Monday (21 April).

However, bunker operations have resumed this morning at Zhoushan’s more sheltered Xiushandong anchorage and the inner anchorage of Mazhi.

The port is currently experiencing strong wind gusts of 24–27 knots and swells approaching one meter.

Several suppliers expect to fully resume bunkering operations in the OPL area by tomorrow (22 April), the source said.

By Tuhin Roy

Photo credit: Manifold Times
Published: 22 April, 2025