World News
World Fuel Services Sees 64% Q4 Bunker Margin Gain From IMO 2020 Boom
US-listed World Fuel Services has found the IMO 2020 transition into cleaner shipping fuels highly lucrative, with a 64% gain in profits per tonne of marine fuel it sold in the fourth quarter.
The company's marine segment saw profits gain 37% to $56.6 million in the fourth quarter of last year from $41.3 million in the same period a year earlier, it said in financial results posted on Thursday.
Marine fuel sales over the same period lost 16.6% to 5.08 million mt in the three months to December 31, from 6.09 million mt a year earlier.
That saw bunker profit margins per tonne sold surge by 64% to $11.15/mt in the fourth quarter, from $6.78/mt a year earlier.
Very low sulfur fuel oil (VLSFO) prices spiked in the fourth quarter with shipping companies shifting to the new blends and building up large stocks to avoid any disruption from shortages.
The highly fragmented nature of the VLSFO market is also a helpful environment for bunker sellers, with widespread uncertainty over price differentials for types of blend with particular specifications.
In a call with analysts Thursday CEO Michael Kasbar warned investors against assuming the profits would last indefinitely.
"We got some benefit with the disruptions and some of the adjustments in [quarters] three and four," he said, according to a transcript from SeekingAlpha.
"I think we haven't seen how this is going to shake out into a regular run rate yield."
"You're going to see a higher base but I'm not sure that you're going to see repeat performances," he added.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 556.50 | 9.00 | 685.00 | 6.50 |
| Rotterdam | 506.00 | 6.00 | 665.00 | 11.00 |
| Houston | 552.50 | 0.50 | 682.00 | 4.00 |
| Fujairah | 548.00 | 7.50 | 750.00 | 3.00 |
| Global 20 Ports Average | 583.50 | 4.00 | 762.50 | 2.50 |
| Global 4 Ports Average | 546.50 | 4.50 | 697.50 | 2.50 |
| Global Average Bunker Price | 632.50 | 2.00 | 811.00 | 1.50 |
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