Economic headwinds from the COVID-19 virus outbreak have overcome increased fuel bills from IMO 2020 for the first time.
Some bunker purchasers are currently paying less for their IMO 2020-compliant fuel than they were for high sulfur fuel oil (HSFO) at the same time last year, according to Ship & Bunker pricing.
Very low sulfur fuel oil (VLSFO) prices at Rotterdam sank by $20.50/mt to $398.50/mt on Thursday, the lowest since Ship & Bunker started tracking the market in July 2019.
Thursday's VLSFO price was also $8/mt below the $406.50/mt shipowners paid for HSFO at Rotterdam on the same day in 2018.
VLSFO prices have been slipping at Rotterdam since hitting a high of $598/mt on January 6.
On the same day a year earlier HSFO prices were $266.50/mt lower at $331.50/mt.
A large part of the drop in VLSFO prices this year is following the crude oil market lower on concerns of the COVID-19 virus outbreak bringing weaker economic growth worldwide.
Brent crude futures dropped from this year's high of $68.91/bl on January 6 to just $52.18/bl by Thursday.
But some of the decline has been unique to the bunker market; on its January 6 peak Rotterdam's VLSFO price in barrels was at a premium of $25.26/bl to Brent crude, and by Thursday that premium had narrowed to just $10.58/bl.
The additional slide for VLSFO may reflect high demand levels from the start of the year as shipowners built stockpiles of the new fuel to ensure a smooth transition into the start of the year; demand has slid since then as shipowners worked through those stocks rather than buying new loads as often as they would normally.
But VLSFO demand should rise again in the coming weeks as buyers return to the market, having used up their stocks built up in December.