The spread between very-low sulphur fuel oil (VLSFO) and high-sulphur fuel oil (HSFO) has widened following Russia’s invasion of Ukraine, notes BIMCO’s Chief Shipping Analyst on Thursday (31 March).
Niels Rasmussen forecasts the HSFO price, however, could rise if Russian volumes coming into the market start declining due to sanctions.
Late 2016, the Maritime Environment Protection Committee (MEPC) of the International Maritime Organization (IMO) agreed to reduce the allowed sulphur content in bunker fuel used outside Emissions Control Areas (ECA) from 3.50% m/m to 0.50% m/m.
Ships that still use HSFO must install a so-called scrubber to achieve an equal reduction in SOx emissions and thereby comply with the sulphur regulation which entered into force on 1 January 2020.
“Currently, 12% of the combined bulk, container, and tanker fleet has a scrubber installed. The majority of ships are therefore still dependent on low-sulphur fuels and their cost competitiveness is influenced by the cost spread between VLSFO and HSFO,” explains Rasmussen.
Crude tankers and container ships have the highest scrubber installation rate at 29% and 17% respectively, with bulk carriers at 12% and only 5% for product tankers.
After bottoming out in late October 2020 at USD 40/tonne the cost premium for VLSFO has since increased, settling at around USD 150-160/tonne in late 2021.
“Since Russia’s invasion of Ukraine, the spread has again increased and now appears to have settled around USD 200/tonne. In percentage terms the VLSFO premium is still around 30%, however, in absolute terms it translates into a saving for ships with a scrubber installed of USD 2,000/day for every 10 tonnes of bunker fuel consumed,” adds Rasmussen.
“If this premium continues, charterers’ willingness to pay a premium for ships with a scrubber installed will surely increase accordingly.”
Some analysts are in the meantime predicting that HSFO may soon follow VLSFO upwards if the volumes of Russian HSFO coming to market reduce through sanctioning (whether self-sanctioning or government sanctions).
Photo credit: BIMCO
Published: 1 April, 2022
The bunker cargo trading company is comprised of several former employees of Endofa’s Dubai branch, says Danish media.
MSC expected to become permanent number one in 1H 2022, when numerous large newbuilt container ships are scheduled to be delivered to the carrier.
‘The study puts to bed the myth and unsubstantiated claims of some NGOs who are simply seeking to ban the use of residual fuel oil,’ says EGCSA Director.
Alternative fuels allow massive reduction in CO₂ emissions over the cycle from production to fuel consumption; at least 80% for air and 90% for sea transport.
If the concerns raised by the industry were not addressed, the regulation risks jeopardising the decarbonisation progress of shipping, rather than enhancing it.
Nakul Dubey, Capt. Ada Ezgi Baser, Norman Xie Changlong, and Rune Jensen join the Middle Eastern office.
Cash of SGD 4.43 million and USD 243,100, and one piece of 100-gram gold-coloured bar recovered in safe belonging to Abdul Latif Bin Ibrahim kept at Extra Space warehouse storage facility, show court documents.
Program introduces periodic assessments, mass flow metering data analysis, and regular training for relevant key personnel to better handle the MFMS to ensure a high level of continuous operational competency.
U.S. Claims Register Summary recorded a total USD 833 million claim from a total 180 creditors against O.W. Bunker USA, according to the creditor list seen by Singapore bunkering publication Manifold Times.
Glencore purchased fuel through Straits Pinnacle which contracted supply from Unicious Energy. Contaminated HSFO was loaded at Khor Fakkan port and shipped to a FSU in Tanjong Pelepas, Malaysia to be further blended.
Individuals were employees of surveying companies engaged by Shell to inspect the volume of oil loaded onto the vessels which Shell supplied oil to; they allegedly accepted bribes totalling at least USD 213,000.
MPA preliminary investigations revealed that the affected marine fuel was supplied by Glencore Singapore Pte Ltd who later sold part of the same cargo to PetroChina International (Singapore) Pte Ltd.
