The price of IMO 2020 compliant VLSFO bunkers in the four major bunkering hubs hit a new low Thursday alongside the continuing decline in the price of crude.
Ship & Bunker's Global 4 Ports (G4) index that tracks the average bunker prices across Singapore, Fujairah, Rotterdam, and Houston, indicated the average VLSFO price Thursday fell to $235.50/mt - its lowest since records for VLSFO began in October last year.
A little over three months ago, on January 6, 2020, the G4 VLSFO price was at a high of $702.50/mt.
Taking into account that IFO380 was the dominant bunker fuel being lifted by buyers prior to the January 1, 2020 introduction of the 0.50% sulfur cap and the vast majority of vessels are now burning VLSFO, in real terms bunker costs hit their lowest since August 15, 2016 when the G4 IFO380 price was $232/mt.
One major different since then is the cost of crude. Brent last Thursday was $27.82/bbl, while back in mid-August 2016 is was just under $50/bbl.
Lower sulfur VLSFO fuel is still more expensive than its high sulfur counterpart, with the G4 IFO380 price last Thursday $173/mt, but the narrowing of that price spread is now starting to put pressure on the economics of scrubber-equipped tonnage.