Methodology update: Singapore delivered marine fuels

How does Argus assess 0.5pc delivered marine fuels in Singapore?

Argus this week changed the way it assesses 0.5pc low-sulphur fuel oil (LSFO) for delivery in Singapore, and introduced a new price assessment for 0.5pc marine gasoil (MGO), to reflect developments in this rapidly changing market.

Argus launched its price assessment for delivered 0.5pc LSFO in Singapore on 1 October 2018. In the absence of trades, bids and offers, this new blended fuel was initially assessed using a ratio of 7 units of 0.1pc low-sulphur marine gasoil (LSMGO) to 1 unit of 380cst high-sulphur fuel oil (HSFO), yielding a calculated price that was based on our two main flagship delivered price assessments for the port.

Argus retired the 7:1 calculated ratio on 11 February and is now assessing 0.5pc LSFO based on price information heard in the market. Since the beginning of January, Argus has received reported deals of 0.1pc LSFO that were done at an average discount of $38.85/t to the MGO 0.1pc sulphur assessment. Based on a survey of market participants, a buyer of 0.5pc LSFO delivered to ship within 4-12 days would not be able to get much, if any, discount from the 0.1pc LSFO price. Respondents were consistent in their answers, which ranged from a $5/t discount to zero discount to the 0.1pc LSFO price. In light of this, Argus on 11 February assessed 0.5pc LSFO at $539/t — $40/t below the MGO 0.1pc price and $125.51/t above 380cst HSFO.

Argus will continue to use this method, of considering a variety of low-sulphur deal information combined with market surveys in the absence of reported deals, as we move towards volume-weighted averaging of deals for this grade. Argus received 470 Singapore bunker deals into its assessment process in January, an average of more than 20 a day, providing the foundation for robust assessments.

Argus also introduced a new price assessment for 0.5pc MGO in Singapore on 11 February. Argus has received several deals of 0.5pc MGO since mid-December last year, with the trades done at an average discount of $3.35/t to the Argus LSMGO assessment.

A 0.5pc MGO cargo is usually blended by the terminal with the sulphur content ranging from 0.4-0.5pc, one supplier says. Argus is assessing 0.5pc MGO at a $3-5/t discount to LSMGO as a result, although this will change based on deals reported and bids and offers obtained from the market on a daily basis.