World News
Value of Euronav's Remaining VLSFO Stockpile Drops by $56 Million
The value of the remaining very low sulfur fuel oil (VLSFO) stockpile that Belgian shipping company Euronav built up last year has declined by $56 million, the company said Thursday.
In 2019 the company bought 420,000 mt of fuels compliant with the International Maritime Organization's new 0.50% sulfur cap and stored them on its giant tanker the Oceania in anticipation of VLSFO prices rising sharply in early 2020.
"By March 31, Euronav had consumed approximately 200,000 tonnes of compliant fuel," the company said in an earnings release.
"In view of the significant drop in oil and fuel oil price in Q1, the company stopped using its stored compliant fuel and purchased what was needed on the open market.
"The market value of the fuel that was not yet consumed was $56 million lower than its book value."
The company previously said it had paid an average of $447/mt for the fuel.
But the company said it would not need to write down the value of the fuel stockpile -- despite a previous warning in March that it would need to -- because current strength in the tanker market more than offsets its loss.
"The company concluded that no write down was required at this time in view of the robust freight market for Q2 and possibly the rest of 2020, which will offset the higher weighted average consumption costs of the bunker oil consumed from that inventory," Euronav said.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 569.50 | 0.00 | 680.00 | 0.00 |
| Rotterdam | 515.00 | 1.00 | 674.00 | 2.00 |
| Houston | 550.00 | 2.50 | 678.00 | 6.50 |
| Fujairah | 560.50 | 0.50 | 753.50 | 2.50 |
| Global 20 Ports Average | 586.00 | 0.00 | 761.00 | 2.00 |
| Global 4 Ports Average | 549.00 | 1.00 | 696.50 | 2.00 |
| Global Average Bunker Price | 634.50 | 1.00 | 800.50 | 2.00 |
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