A revolution in marine fuel marketsIMO 2020 is causing a fundamental change in the bunker market. As underlying buying patterns shift, reference prices are changing in response. Argus delivered bunker prices are a relevant and appropriate pricing solution.
Traditional reference prices are becoming detachedThe high-sulphur fuel oil (HSFO) cargo market is becoming disconnected from the delivered market, and this trend will only continue as declining sales weigh on HSFO liquidity. The result is that HSFO is no longer a suitable reference for a delivered bunker contract.
With January 2020 fast approaching, the outlook for underlying demand for IMO-compliant bunker fuels appears to be split between marine gasoil (MGO) and 0.5pc sulphur fuel oil. Cargo and barge markets will become less liquid and less price transparent, meaning prices become further detached and unpredictable.
Ensure you have the right tools for the jobSome 0.5pc sulphur fuel oil contracts for the first quarter of 2020 have been signed referencing the gasoil market. But this is an unrelated market for a different fuel. Gasoil is a different quality product, with different market uses, traded by different players for different reasons. It is not a sustainable long-term solution as a price reference for IMO-compliant marine fuels.
If you are signing a 0.5pc sulphur fuel oil contract, you should be using a 0.5pc sulphur fuel oil index to effectively manage your risk exposure. Argus delivered bunker price assessments are based upon the fundamentals driving the shipping industry and the way it trades. Our delivered bunker indexes are based on actual deals, bids and offers, making them the most appropriate reference prices for your bunker contracts.
Don’t waste time having to ask questions such as: What's the premium? What's the discount? Is it correlated? What's the differential? Use an Argus delivered price assessment for your delivered bunker contracts.
A global portfolio of Argus bunker assessments
Our global portfolio of IMO-compliant price assessments covers the world’s most important bunker hubs.
In the most liquid benchmark hubs such as Singapore, Amsterdam-Rotterdam-Antwerp and the US Gulf coast, we seek to use a volume-weighted average (VWA) methodology based on submitted deal information. We also assess smaller hubs with lower liquidity — where trade is often weighted towards long term-contracts with low spot volumes. For these locations where a VWA methodology is not appropriate, we use a range of daily deals, firm quotes and market indications received from marine fuel suppliers, traders, brokers, ship owners and ship charterers to inform our price assessments. These prices are then tested in the market.
Whether you are signing contracts referencing the world’s most liquid pricing hubs or tracking regional ports for market indications, the Argus Marine Fuels service has the data and insight you need.
Argus’ new IMO-compliant delivered price assessments accurately capture price movements and take into consideration different specifications. They provide you with a rigorous pricing alternative to differentials and are the most appropriate price reference for the emerging low-sulphur marine fuels market.
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