AsiaBunkeringMiddle East

Bunker prices top $900 in Singapore and Fujairah

Bunker prices at the two of the world’s largest bunkering hubs have shot past the $900 per tonne mark for the first time ever. Prices in Fujairah, the world’s third largest bunkering port, hit $918 today, while they stood at $904.50 in Singapore, the top bunkering hub in the world, with Ship&Bunker’s overall global average price at a record high of $885.50.

Bunker fuel prices have been on the rise since bottoming in the summer of 2020, but have accelerated rapidly to new record highs as global oil prices are now over $110 per barrel. Sanctions against Russia as well as general geopolitical uncertainty and tensions have sent Brent prices to the highest level since 2014. The price of very low sulfur fuel oil (VLSFO) is up 35% since the beginning of the year, and the fuel spread between VLSFO and HSFO is now over $200 per tonnne.

A new report from Braemar ACM noted that since the implementation of IMO 2020, the spread between VLSFO and HSFO has widened each year, and forward pricing at current levels suggests this will persist through 2022 and into 2023. Despite the largest spreads in these fuels coming in early January 2020, at $370.30 per tonne, the average spread for the year totalled $96.60. In 2021, this increased by 20.4% to $116.3. More recently, the bunker price spread has further widened, averaging $216 per tonne so far in 2022, 85.7% higher than in 2021.

“Forward prices indicate these levels are likely to drop off modestly in 2022, averaging at $189.4/t, but still significantly higher than previous years’ levels,” Braemar ACM stated (see chart below).

Analysts at investment bank Jefferies have also been looking at the impact of today’s sky-high bunker prices.

“Owners operating in the spot market on voyage charters are more exposed to rapidly rising bunker prices, especially in the short run. That said, owners will demand higher rates over time to compensate for rising fuel costs and new rate floors will be established,” a report from Jefferies pointed out, going on to highlight how ships with scrubbers installed will profit from the $200+ fuel price gap.

Looking at the impact on the container trades, Lars Jensen, CEO of consultancy Vespucci Maritime, detailed via LinkedIn that container carriers use some 60m tons of fuel per year. This means the total fuel cost has increased by $37m per day since the start of the year, equating to $80 per teu.
“[S]ubstantial BAF increases are coming,” Jensen warned today.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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