Bunker Prices Predicted to Rise 25% in 2018

by Ship & Bunker News Team
Tuesday July 31, 2018

After the recent rise in marine fuel prices prompted a number of leading carriers to implement controversial emergency bunker surcharges, German rating agency Scope is predicting bunker prices to rise 25% this year, compared to 2017.

Such gains will put pressure on container-shipping firms, "squeezing thin profit margins despite robust global economic growth and buoyant trade, notably in Asia," Scope said in a report released Monday.

Data from Ship & Bunker lends strong support for Scope's prediction: In 2017, the average IFO380 bunker price in the Global Top 20 Ports responsible for the vast majority of the world's marine fuel sales was $332.35/mt.

As of July 30, the year-to-date average for 2018 is already 25.6% higher at $417.32/mt.

As would be expected, this rise in bunker price corresponds to a rise in oil prices, but Ship & Bunker data also indicates that bunker price gains have outpaced those seen in the crude markets.

Brent at the start of 2018 was priced at around $501/mt (converted from USD/bbl to USD/mt at a rate of 7.53 barrels per metric tonne) and IFO380 bunkers were being sold at $392/mt - a discount to Brent of around 22%.

That discount has now narrowed to just 17%, with Brent currently priced around $564/mt and bunker prices having risen 19.8% since the start of the year to just under $470/mt.

Even if the average bunker price does rise 25% overall this year, such a gain would still be considerably less than the 40% increase witnessed for 2017, with the average price in 2016 just $234.90/mt.

Ship & Bunker News Team
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