World News
IMO2020: Shift to Contract Sales
Ahead of the International Maritime Organisation's lower sulfur cap on bunker fuel, market players are detected a shift from spot purchase to contract buying, according to price reporting agency SP Global Platts.
Many bunker market participants are already seeing a shift towards more volume being bought on a contract basis rather than on the spot market.
"[There is] less activity worldwide on the spot market," a bunker buyer was quoted as saying. The buyer added that while the overall volume sold remained unchanged, more players were moving towards contract deals.
One reason for the switch seems to involve buyers seeking to build longer-term relationships with suppliers to secure a reliable supply of compatible and compliant bunker fuel.
However, another view said the bullish crude oil price is creating price uncertainty and an urge to lock in prices at an assumed lower level.
From the start of 2020, the 0.5% sulfur cap on bunker fuel is expected to see marine distillates rise in price while the price for high sulfur fuel oil is expected to fall. The extent of the price differential is a key talking point for ship operators and bunker companies in the run up to the sulfur cap change.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 646.50 | 5.50 | 773.50 | 11.50 |
| Rotterdam | 604.00 | 5.00 | 756.00 | 5.00 |
| Houston | 630.50 | 1.00 | 798.50 | 4.00 |
| Fujairah | 650.50 | 3.00 | 897.00 | 13.50 |
| Global 20 Ports Average | 662.50 | 1.00 | 858.50 | 0.50 |
| Global 4 Ports Average | 633.00 | 3.50 | 806.00 | 6.50 |
| Global Average Bunker Price | 718.50 | 0.50 | 914.00 | 1.00 |
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