World News
Get Ready for Bunker Quality Problems as Prices Rise: KPI OceanConnect
Some of the bunker quality problems anticipated before the IMO 2020 transition may now come to pass as oil prices surge this year, according to marine fuel supplier KPI OceanConnect.
Ahead of the start of 2020 and the shift to 0.50% sulfur products becoming the dominant bunker fuel, many industry voices suggested the high price and unspecific definition of VLSFO would lead to some suppliers coming up with poor-quality blends that might bring about engine trouble for shipowners.
Last year's oil-price crash largely put paid to that idea, with much lower prices and low demand across the barrel leading to different financial incentives. But with crude rallying again this year, the bunker industry may need to return to some of the concerns it had before 2020, according to KPI OceanConnect CEO Søren Høll.
"It’s becoming increasingly important for the industry to prepare for some of the risks highlighted back in 2019, which may surface in the coming months," Høll said in a LinkedIn post on Tuesday.
"There will be consequences if oil prices climb."
The return of demand to the trucking and aviation industries will put new pressures on the middle distillates market, and it is this dynamic that may result in quality problems for marine fuels.
"There have been fewer quality issues than many analysts predicted, but this may have been partly masked by the pandemic and the depressed oil price," Høll said.
"These challenges may rear their head once the world starts to recover from Covid-19, distillate demand increases in other industries, and if unscrupulous suppliers start using cheaper components for blending.
"As we saw in early 2018 from ships bunkering in Houston, these fuels might be ISO 8217 compliant, but they can still cause mechanical and safety issues."
The bunker industry faced a global contamination crisis in 2018 as quality problems first observed in the US Gulf were exported to marine fuel hubs around the world.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 649.50 | 2.00 | 778.50 | 8.50 |
| Rotterdam | 602.00 | 0.50 | 748.00 | 6.00 |
| Houston | 624.00 | 5.00 | 792.00 | 3.50 |
| Fujairah | 649.50 | 2.00 | 898.00 | 3.00 |
| Global 20 Ports Average | 662.00 | 2.00 | 855.00 | 1.50 |
| Global 4 Ports Average | 631.00 | 1.00 | 804.00 | 0.50 |
| Global Average Bunker Price | 717.50 | 0.50 | 913.50 | 1.00 |
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