Monjasa Adds HSFO Capacity in UK in Response to Rising Demand

The firm has 40,000 mt of oil storage at Portland. Image Credit: Monjasa

Global marine fuel supplier and trading firm Monjasa is shifting some of its capacity to delivering HSFO on rising demand for the bunker grade.

As Ship & Bunker reported last month, HSFO demand overtook VLSFO at Rotterdam in Q1 for the first time since the IMO 2020 transition.

Monjasa has observed a similar effect from its Portland operation on the south coast of England, Jeppe Hjort Ebbesen, Northwest Europe trading director at Monjasa, told Ship & Bunker last week. The firm has 40,000 mt of oil storage at Portland.

"We have seen the same thing in the English Channel, so by May 1, we decided to introduce it in our product mix and have a dedicated tanker for high-sulfur and gasoil, supplying all of the northern French ports and most of the UK ports as well," Ebbesen said.

For now an existing delivery vessel has been shifted to carry HSFO, while the firm deliberates over whether rising HSFO demand is likely to last long as a market phenomenon.

"We reallocated one of the barges," Ebbesen said.

"Basically, this is relatively new, and we wanted to see whether this is potentially a long-lasting trend, or just a quick pick-up due to the Red Sea situation.

"But if this seems to be a workable solution in the long term, then of course we're going to add another barge; the current fleet won't be able to sustain the full market.

"With the increase in ARA, it seems like people are finally seeing that this is a viable option for the low-sulfur needs sailing into the Baltics, and a lot of the vessels we are seeing are scrubber-equipped.

"So yes, I do believe and hope that it's a long-term solution."

That long-term viability will depend on large part on whether HSFO's discount to VLSFO can remain at a wide enough level to make scrubber investments look attractive. The discount at Rotterdam stood at $118.50/mt in the first quarter, according to Ship & Bunker data, up from $88.50/mt the previous quarter.

"If I were a betting man, I'd probably put my money on around the $100/mt mark [as a long-term average]," Ebbesen said.

"This is the trend we've seen over the past couple of years, and I don't see it increasing a lot.

"It is now above $115-120/mt in ARA, but whether that's going to last, or whether we're going down to the $100/mt mark again, I don't know."