World News
Traders Ready Amid Tightening Credit Terms
Some physical suppliers have been tightening their credit terms ahead of IMO2020, adding further pressure to the market as bunker prices rise alongside the new fuel rules.
Speaking at a recent industry event, Sing Fuels' MD Sonnich Thomsen said some players were asking for terms of 15 to 21 days, rather than the usual 30, Platts report.
Shipowners, meanwhile, were looking to extend terms to 45 to 60 days.
"A massive mismatch exists and somebody will have to absorb it. In such a scenario, bunker traders can act as facilitators of credit," Thomsen was quoted as saying.
The new fuel rules are estimated to push up prices 20%-40% and the early signs suggest this is indeed the case.
With the industry currently needing $10 billion in credit for average 30 day terms, lifting prices this amount would push that need to $12-$14 billion, or as much as $28 billion is 60 day terms became the norm.
In addition to this, suppliers will beed additional credit to account for capital locked up in IMO2020 related legal disputes. Thomsen says these are already starting to appear.
"It will be a bumpy ride [for the industry] in the next six months but I am sure that things will stabilize thereafter," he said.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 556.00 | 9.50 | 674.00 | 4.50 |
| Rotterdam | 507.00 | 5.00 | 663.50 | 12.50 |
| Houston | 549.50 | 2.50 | 677.00 | 5.00 |
| Fujairah | 548.50 | 7.00 | 748.50 | 4.50 |
| Global 20 Ports Average | 580.00 | 3.50 | 761.00 | 1.50 |
| Global 4 Ports Average | 540.00 | 6.50 | 691.00 | 6.50 |
| Global Average Bunker Price | 625.50 | 7.00 | 809.50 | 1.50 |
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