Asia/Pacific News
Latest Singapore MFM Comments Highlight Again the False Economy of Artificially Lower Bunker Prices
Unnamed industry sources this week have once again been quoted in the media as predicting the mandatory use of mass flow meters (MFMs) in Singapore from January 1, 2017, will cause bunker prices in the port to rise, and drive volumes elsewhere.
"If a vessel is calling at say both Singapore and Hong Kong, then it is certainly going to pick up its fuel from Hong Kong, if prices are more attractive there. Some volume will likely shift to other ports too," Platts quoted an unnamed bunker supplier as saying.
Traders were also quoted as predicting the cost of MFMs would add a $3-$5/mt premium to prices - potentially significant given the differential between IFO380 in Singapore and Hong Kong has been as little as $1/mt in recent weeks, according to Ship & Bunker data.
However, industry figures Ship & Bunker has spoken to say such comments only highlight the false economy of paying less per tonne on paper when it means you will almost certainly end up with a short delivery.
"Residual fuel flows West to East in Asia. If a port to the East is cheaper then it's probably because they need MFM's," Adrian Tolson, Senior Partner at 20|20 Marine Energy, told Ship & Bunker.
"Maybe we should be thinking about getting the quantity we pay for!"
Simon Neo, Executive Director, Piroj International also addressed this exact point almost two years ago at SIBCON 2014.
"Pricing on paper is high [with MFMs], but in terms of turn around costs, you will actually save," he said, noting that savings would not only come from bunker buyers actually getting the quantity of fuel they paid for, but the fact that the bunkering process itself will be quicker.
He also noted that all bunker tankers in Singapore need to do about eight to ten turnarounds a month to be in business, and as such adding a $1/mt premium to bunker prices will allow Singapore's suppliers to recover the cost of MFMs in around six months.
If used correctly, MFMs are generally accepted to be a good way of addressing volume related malpractice, and even though Singapore is the first port to mandate the use of MFMs, suppliers in a growing list of ports around the world including Istanbul, Fujairah, and Rotterdam are now using the technology.
As to the speculation over their impact on Singapore - Hong Kong bunker price differentials, it is worth noting that Hong Kong is now on the list of ports where MFMs are voluntarily available.
In a Ship & Bunker feature earlier this week, Douglas Raitt, Regional Consultancy Manager Lloyd's Register Asia, also highlighted the importance of properly accrediting MFMs in markets outside of Singapore to ensure reliable accuracy.
