The recent increase in discussions on how to decarbonise the container shipping industry have not, so far, had any short-term effects on demand. And that is not unexpected. Though the long term prognosis for fossil fuels may be more unclear as major vessel operators search for methods to comply with the latest regulations, and to maintain their competitiveness as new rules are applied.
[s2If is_user_logged_in()]It is not unlikely that the bunker report in 10 years-time will have an array of fuels, from bio-LNG, to hydrogen and ammonia and possibly some that are not currently under consideration.
Nevertheless, the current MABUX index has seen prices increase steadily over the week as the price of crude also gained with the 380 HSFO index rising from 365.37 USD/MT to US$376.15/tonne (US$+10.78), VLSFO added US$15.56: from US$460.94/tonne to US$476.50/tonne while MGO gained US$12.79 and rose from US$516.85/tonne up to US$529.64/tonne.
The upward trend for the global scrubber spread (SS) (price difference between 380 HSFOs and VLSFOs) also continued as it widened by US$2.56 and averaged US$97.84 (US$95.28 a week ago).
Meanwhile, the correlation between MBP (Market Bunker Prices) and DBP (MABUX Digital Benchmark) in four global largest hubs over the past week showed that 380 HSFO fuel was moderately undervalued in all selected ports, with Houston recorded a 100% correlation between MBP and DBP indices for the first time. In other ports, the undercharging of 380 HSFO ranged from minus US$3 (Fujairah) to minus US$12 (Rotterdam and Singapore).
At the same time, the prices of VLSFO fuel grade, according to DBP Index, remained moderately high in all selected ports in the range from plus US$9 (Rotterdam) to plus US$21 (Houston).
The DBP also showed MGO LS was undervalued in all ports ranging from minus US$15 (Fujairah) to minus US$28 (Singapore), with the exception of Houston (overcharged by US$7). All in all, there are no drastic changes in MBP vs DBP correlation trends registered for VLSFO and MGO LS fuels so far.
In January, the DBP index at the Port of Rotterdam showed a slight undervaluation of 380 HSFO fuel and an overvaluation of VLSFO. 380 HSFO was undercharged by an average of US$11.36 and VLSFO overcharging averaged US$5.91. This trend continued in early February.
As per the International Maritime Organization (IMO), a total of 55 cases (FONAR) of very low sulphur fuel oil (VLSFO) unavailability were recorded in 2020. Given that more than 60,000 ships plied the world’s oceans in trade last year, this was a remarkably low percentage of ships encountering difficulty in obtaining compliant fuel. FONARs can be filed to a ship’s flag state if it is unable to get compliant fuel at its next port of call but is not a guarantee of not being prosecuted by the flag or port state but will be taken into account.
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