MABUX Digest: Top events on global bunker market: Week 10
The Weekly Bunker Review was contributed by Marine Bunker Exchange (MABUX)
MABUX World Bunker Index (consists of a range of prices for 380 HSFO, VLSFO and MGO (Gasoil) in the main world hubs) continued downward trend in the period of Mar 02-06:
380 HSFO 343.10 → 337.68 USD/MT (minus 5.42 USD)
VLSFO 474.00 → 465.00 USD/MT (minus 9.00 USD)
MGO 551.39 → 547.87 USD/MT (minus 3.52 USD)
• With the entry into force of the International Maritime Organization’s (IMO) fuel oil carriage ban on 1 March, non-scrubber-equipped vessels carrying bunker fuel oil with a sulphur content of more than 0.50% will be in automatic violation of the IMO 2020 regulation. Showing that vessels without Exhaust Gas Cleaning Systems have non-compliant fuel aboard will be enough to prove a violation.
• In India shipowners are facing initial challenges with the supply and availability of very low sulphur fuel oil (LSFO). Market participants indicate India’s current LSFO demand is 1-1.5 mmtpa (assuming 5%-10% of Indian ships have installed scrubbers), which is only 1-2% of global bunker-fuel sales.
• China’s marine fuels sales fell by as much as 50% in February as the rapidly spreading coronavirus and prolonged Lunar New Year break strangled freight movement in and out of the country. The demand shock could also delay Chinese refiners’ plans to boost output of VLSFO, which yielded profits averaging about $15 a barrel above Brent crude in February
• Preliminary statistics released by the Panama Maritime Authority (AMP) show that marine fuel volumes in January 2020 totalled 477,399 metric tonnes (mt), a 8.81% increase on the 438,681 mt sold in January 2019. A marked increase in vessel transits along the canal supported the growth in bunker sales. A total of 725 vessels transited the canal in January 2020 up from 569 in January 2019.
• South Korea said it has decided to take additional steps to support local shipping firms and passenger ferry operators amid growing concerns over economic fallout from the global spread of the new coronavirus. Under the updated plan, South Korea will provide some 90 billion won in low-interest loans of around 2 percent to local shipping firms should the virus outbreak continue for more than three months. Each company can apply for up to 5 billion won.
• The European Commission proposed on Mar.04 enshrining the European Green Deal’s commitment for carbon neutrality by 2050 into legislation, as part of the European Union’s heightened focus on climate action and policy. Under a European Climate Law, the 2050 carbon neutrality target would become legally binding, and all EU institutions and member states will be collectively bound to take the necessary measures at EU and national level to meet that target.
• In a move intended to ‘accelerate strategy execution,’ Wärtsilä says the new businesses - Marine Power, Marine Systems and Marine Voyage – will be operational as of 1 July. The reorganisation is said to be a continuation of the changes the company made in 2019 when its equipment and service businesses were integrated to strengthen the focus on complete lifecycle solutions.
• Since the start of the year, Lloyd’s Register BQS Service has noted ‘a large number of discrepancy incidents and shortages in bunker surveys’. While acknowledging that the contributory factors to this issue have varied from port to port, FOBAS highlights that one of the main reasons for the situation could be that very low sulphur fuel oils (VLSFO) are not stabilising in barge and vessel sounding pipes. This can lead to inaccurate or false readings of the measured fuels ‘due to poor flow of the liquid caused by low temperatures (ambient and fuel) causing waxy conditions.’
• The Shipowners' Club cautions, the implementation of the global 0.50% sulphur cap at the start of the year could result in an escalation in the number of commercial disputes between Club members and charterers, bunker suppliers and scrubber equipment installers – and the costs of such disputes could be high.
• The International Maritime Organization (IMO) has announced that it has decided to postpone two meetings that were due to take place this month as a result of the coronavirus outbreak – and there may be further meeting postponements. The two meetings which have been postponed are:
- the meeting of the Scientific Group of the London Convention and London Protocol, which was scheduled to take place next week from 9 to 13 March
- the 107th session of the Legal Committee, which was scheduled to take place from 16 to 20 March
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