Against a backdrop of falling petroleum prices, the cost of marine fuel has dropped to 2021 levels, Freight Waves writes.
“Oil prices have been on the decline over the past few weeks, falling further this week on weak manufacturing data out of China,” Deutsche Bank shipping analyst Chris Robertson was quoted as saying in the 2 May report.
Most commercial ships burn fuel with 0.5% sulphur known as very low sulphur fuel oil (VLSFO), according to the report. Following the introduction of the IMO 2020 environmental regulations on 1 January 2020, the use of VLSFO or other low-sulphur fuels has been required.
The only exception is for ships with exhaust gas scrubbers, which can continue to burn cheaper 3.5% sulphur fuel known as high sulphur fuel oil (HSFO), according to Freight Waves.
The price of VLSFO had fallen more steeply, in line with the drop in Brent crude oil prices, while the price of HSFO had held up better, significantly narrowing the VLSFO-HSFO spread, the report said.
The average price of VLSFO at the world’s top 20 refuelling hubs had dropped to US$593.50/tonne on 1 May – on par with December 2021 prices, according to Ship&Bunker data.
Meanwhile, the price of HSFO at the world’s top 20 hubs was US$496.50/tonne on 1 May, a drop of 35% from the peak in May 2022 and back to levels seen in September 2021.
According to Ship&Bunker data from the top 20 refuelling ports, the VLSFO-HSFO spread fell below US$100/tonne on 1 May, closing at US$97/tonne. This was less than a quarter of the all-time high reached last July and down to levels seen in October 2021.
In bulk commodity shipping, the per-day-equivalent spot rate is calculated net of fuel cost as the ship operator pays for fuel in a spot voyage. This means, the higher the VLSFO-HSFO spread, the higher the positive effect on net spot income for owners of scrubber-equipped ships, due to their fuel cost savings — and vice versa, according to Freight Waves.
Clarksons Securities, which calculates the dollar-per-day spot-rate effect of scrubbers for various ship types, estimated that a non-eco-design for a very large crude carrier (VLCC; a tanker that carries 2M barrels of oil) with scrubbers earned a premium of US$6,000/day versus a non-scrubber VLCC as of 2 May. The premium was quadruple that of US$24,000/day last July.
According to Clarksons’ estimates, a bulker in the Capesize category (with capacity of around 180,000 deadweight tonnes) with scrubbers earned US$$4,200/day more than a non-scrubber Capesize as of 2 May. Last July, the premium was US$18,000/day, over four times higher.
