VLSFO to HSFO price differential stands at record $538 per ton in Singapore

Date: Wednesday, June 15, 2022
Source: Splash 24/7

Scrubber payback times are accelerating fast for those ships calling at the world’s largest bunkering hub, Singapore.

Very low sulphur fuel oil (VLSFO) prices in Rotterdam are at $965 per ton and $1,149 per ton in Singspore. However, while VLSFO prices are rocketing, high sulphur fuel oil (HSFO or IFO380) prices are falling back, resulting in an ever-wider spread between compliant fuel oil and heavy fuel oil.

Owners with scrubber equipment now are able to reap the benefits of deltas ranging from $332 per ton in Rotterdam and $538.50 per ton in Singapore. This also means the divergences have never been bigger, with Lars Jensen from liner consultancy Vespucci Maritime putting these numbers in context last week.

The IFO380 average fuel price in 2019, prior to the low-sulphur rules, was $433 per ton. Now the premium for VLSFO alone is at the level of the full fuel price prior to IMO2020 and prior to the pandemic, Jensen observed in a post on LinkedIn.

“The prospect of a $700 per ton difference between VLSFO and HSFO, held out as a prospect by the scrubber manufacturers at the advent of the IMO2020 regulations, is starting to become more realistic by the day,” a markets update from broker Lorentzen & Co stated today.

High prices are not the only concern in Singapore. Fresh from a bunker contamination scandal, the Southeast Asian republic is facing further quality issues with FOBAS, the fuel testing unit of British class society Lloyd’s Register, issuing a warning that a number of VLSFO samples from Singapore have exceeded the 0.5% limit for water with the fuels in question found to have water ranging between 0.65% to 1.9%.

“Any carry over of water into the engine fuel rail has potential to cause damage to the fuel pumps, injectors and cylinder components as wekk as possible turbo charger surging and fouling,” FOBAS warned in an advisory.

Some 200 ships were hit hard by off-spec high sulphur fuel oil sold in Singapore by Glencore and PetroChina in February and March. The fuel was found to contain high concentration levels of damaging chlorinated organic compounds.

 

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