Bunker prices slip, high-low sulphur spread narrows to $56


Marine fuel prices have dropped significantly this week with the low sulphur grade nearing below $200 per metric tonne (pmt), narrowing its price differential with the high sulphur grade.

The plunge in marine fuel prices follows WTI crude futures nosediving into negative territory of minus $37.63 per barrel on Monday, before climbing back up to $17.72 per barrel on Thursday – still around two-decade low as demand for oil slumps due to the coronavirus pandemic.

The price indication for the Singapore very low sulphur fuel oil (VLSFO) was at $229 pmt on Thursday, after inching up from its lowest seen at $206.50 pmt on Wednesday, according to data from Ship & Bunker.

Compared to $734 pmt on 1 January, Singapore VLSFO price has plunged by 69% on Thursday.

All ocean-going ships without scrubbers are required to burn the 0.5% sulphur content fuel, or VLSFO, starting this year under IMO’s Marpol Annex VI global regulation on curbing sulphur emissions.

For scrubber-fitted ships that are still able to use the high sulphur 380 cst bunker grade, prices have softened to $173 pmt on Thursday, rebounding from the lowest seen this year at $158 pmt on Wednesday.

The data shows a price differential of just $56 on Thursday between Singapore VLSFO and 380 cst, a sharp narrowing from the differential of $367.50 at the start of 2020, putting pressure on the economics of scrubber-equipped vessels.

Various reports have suggested that a high sulphur-low sulphur price differential of $285-370 would mean a scrubber payback of nine to 18 months, while a price differential of around $140 would see the payback lengthen to 30 months.

Container shipping analyst Alphaliner recently observed that at least 20 ships have entered shipyards for scrubber retrofitting in April, joining some 35 units that entered the yards in March.

The total number of containerships undergoing scrubber retrofits has dropped to 90 from a peak of 119 in mid-March.

The plunge in marine fuel prices follows WTI crude futures nosediving into negative territory of minus $37.63 per barrel on Monday, before climbing back up to $17.72 per barrel on Thursday – still around two-decade low as demand for oil slumps due to the coronavirus pandemic.

The price indication for the Singapore very low sulphur fuel oil (VLSFO) was at $229 pmt on Thursday, after inching up from its lowest seen at $206.50 pmt on Wednesday, according to data from Ship & Bunker.

Compared to $734 pmt on 1 January, Singapore VLSFO price has plunged by 69% on Thursday.

All ocean-going ships without scrubbers are required to burn the 0.5% sulphur content fuel, or VLSFO, starting this year under IMO’s Marpol Annex VI global regulation on curbing sulphur emissions.

For scrubber-fitted ships that are still able to use the high sulphur 380 cst bunker grade, prices have softened to $173 pmt on Thursday, rebounding from the lowest seen this year at $158 pmt on Wednesday.

The data shows a price differential of just $56 on Thursday between Singapore VLSFO and 380 cst, a sharp narrowing from the differential of $367.50 at the start of 2020, putting pressure on the economics of scrubber-equipped vessels.

Various reports have suggested that a high sulphur-low sulphur price differential of $285-370 would mean a scrubber payback of nine to 18 months, while a price differential of around $140 would see the payback lengthen to 30 months.

Container shipping analyst Alphaliner recently observed that at least 20 ships have entered shipyards for scrubber retrofitting in April, joining some 35 units that entered the yards in March.

The total number of containerships undergoing scrubber retrofits has dropped to 90 from a peak of 119 in mid-March.



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