Argus sees first Singapore LSFO deal ahead of IMO 2020

Argus has reported a deal for delivered 0.5pc low-sulphur fuel oil (LSFO) in Singapore for the first time, in a sign that activity in the low-sulphur market could be picking up ahead of the IMO 2020 marine fuel regulations.

A shipowner bought from a supplier a small-sized clip at a price in the lower $570/t level for delivery during the second half of May. The stem was transacted after trading hours.

Argus yesterday assessed HSFO 380cst bunkers at $414.93/t, 0.5pc LSFO at $573/t and 0.1pc marine gasoil at $618.39/t.

Suppliers are hesitant to clean out barges to deliver compliant fuel ahead of 2020 because demand for 0.5pc LSFO today remains small and volatile. Given that supplies are limited, buyers are strongly advised to place their orders weeks in advance. The Maritime and Port Authority (MPA) of Singapore recently released a list of suppliers of compliant marine fuels, which showed that most physical suppliers in the port will have low-sulphur fuels available only in the third to fourth quarter of this year.

Only a small number of transactions for 0.5pc LSFO have taken place in Singapore so far, mainly for testing purposes or for vessels going to China which has since January 2019 implemented a 0.5pc sulphur limit along most of its coastline. Specifications for the fuel differ widely, with viscosities ranging from 10-300cst and actual sulphur levels at 0.3-0.5pc.

The IMO 2020 regulations will cap sulphur content in marine fuels at 0.5pc from 1 January next year, down from 3.5pc now.

Argus has been reporting delivered marine fuel prices using a volume-weighted average of reported transactions in the port of Singapore since June 2018. A cumulative total of 37 companies have submitted deal information, with Argus reporting an average of 27 deals each day in April. An assessment for 0.5pc LSFO was launched in October 2018 on a calculated basis, which was retired in February 2019 after which Argus started assessing the grade based on price information heard in the market.