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Bunker spread narrows in January

January bunker prices for heavy fuel oil (HFO), marine gas oil (MGO) which is 0.1% sulphur and very low sulphur fuel (LSFO) which is the blended low sulphur oil have converged in the first three weeks of the IMO 2020 regulation coming into force.

On 7 January bunker prices stood at US$401/tonne for HFO and US$740 for both LSFO and MGO. By the 10 January that convergence had already begun with a spread of US$326 between LSFO and HFO with MGO dipping US$12/ tonne more than LSFO.

Ten days later on 20 January the price of LSFO and MGO had fallen substantially to US$650 and US$655/tonne respectively while HFO had also dipped in price, but by only around US$30 to $US353/tonne.

Marine Bunker Exchange (MABUX) MD Sergey Ivanov said it is too early to call it a trend, “It’s a momentum trend, that is the trend is down for the moment, but the it’s not yet a long-term trend.”

Ivanov pointed out that both the bunker supply and ship owning industries were very well prepared for the switch to LSFO and there have been no major incidents reported. In Singapore Pacific International Lines and two smaller Russian carriers had to wait up to three weeks for LSFO bunkers, but it was not a problem of fuel supply.

“In Singapore there are around 100 barges that have not all been prepared to carry LSFO blends. Also, there are 10 different blends of fuel and to change blends the barges would have to stop operations and clean the tanks, or just reject the request for the fuel,” explained Ivanov.

Nick Savvides

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