Shipping fuel prices are falling despite the ongoing Russia-Ukraine conflict, FreightWaves writes.
Following Russia’s invasion of Ukraine on 24 February, shipping fuel prices reached record highs but had now fallen to pre-war levels due to fears of future demand weakness, the 5 December report said.
Prices for very low sulphur fuel oil (VLSFO) – the fuel used by most commercial vessels – were down to January levels, while prices for high sulphur fuel oil (HSFO) – the fuel burned by ships using exhaust gas scrubbers – were down to September 2021 rates, the report said.
Based on prices at the top 20 refuelling hubs, the average VLSFO price on 2 December was US$685.5/tonne – a 39% drop from the record high on 14 June, according to a report by Ship&Bunker. Meanwhile, the average HSFO price was US$457/tonne – a 32% reduction from the 5 May rate.
The price of marine fuel was important to importers of containerised cargo as shipping companies passed on fuel costs via bunker adjustment factors (BAFs), FreightWaves wrote, while in bulk commodity shipping, the price of fuel was important to spot markets as shipowners paid for fuel on spot voyages.
Container line BAFs were dropping as shipping companies passed on fuel cost savings, according to a DPI Signals report on 2 December.