Getting out a bunker fuel price that reflects trading activity more keenly is the aim of price-reporting company Argus Media's revamped assessment for 380 CST bunker fuel in Singapore.
While Argus has been publishing price information on the Singapore bunker market for some time, vice president oil products Asia Kevin Wright said that the time was right to rethink the service.
"We've significantly revamped the methodology for our 380 CST published price," Wright told Ship & Bunker.
"We started the process in February and launched the new price assessment from mid-June."
The methodology has been tweaked to reflect more closely real market conditions.
"There's a daily cut off point at 7pm for reported trades," Wright explained.
Trades falling outside standard terms and conditions -- defined by Argus as for delivery 4-12 days from the trade date and of between 500 metric tonnes (mt) to 3,000 mt for 380 CST heavy fuel oil, 50 mt to 500 mt for distillates -- are not included in the daily assessment.
Price outliers, defined by Argus as more than $2/mt from the mean, are also not included.
The volume weighted average (VWA) for each grade is then calculated making this the main change from before.
According to Wright, VWA is more reflective of all trades taking place in the day, rather than just at a specific time.
"We feel the end result, the published price, is a pretty good reflection of deals done in the market on that day."
The Singapore bunker market is the world's biggest and Argus has been publishing information on the market for some 15 years. Where does Wright see this revamped assessment going?
""You must remember that much of the traded volume in Singapore revolves around term contract deliveries, with spot bunker stems accounting for around a quarter to third of the total.
"We currently have about 8% of the total market.
"If, with the new assessment, we are able to double that, our published price would then be based on around half of the actual deals done in any one day.
"And that would be a good place to be."
Given the raft of changes afoot in the bunker fuel space, Wright said the company will be publishing price assessments on 500 CST, 0.5% sulfur fuel oil and 0.5% sulfur marine gasoil before the end of the year.
"The 0.5% global sulfur cap on bunker fuel is a major change for the industry so it seemed like a good time to rejig our offer," he said.