BIMCO: Market Uncertainty Causes More Fuel Oil Price Volatility

first_imgThe oil market has recently been shaken up by geopolitical events, but market uncertainty led to more volatility in the price difference between low and high sulphur fuel, according to the shipping association BIMCO.The uncertainty of the upcoming IMO 2020 sulphur cap regulation is having a big impact on the bunker market. Whereas, the price for marine gas oil low sulphur (MGO LS) has largely remained stable, the price for high sulphur fuel oil (HSFO) has been become increasingly more volatile in recent months. The HSFO-MGO LS price spread has, in some ports, widened to levels exceeding the actual price for HSFO.“The oil market has remained on edge in recent months with plenty of market volatility to go around. The bunker fuel oil market is normally directly correlated to the developments in the crude oil market, but recently, IMO2020 has added a seemingly disruptive interference with the pricing of bunker fuel on top of it.”In less than two months, shipowners will no longer be allowed to burn fuel oil with sulphur emissions above 0.5%, unless a scrubber is working on board. This presents a massive challenge for the industry, where the vast majority of ships are operating on 3.5% HSFO.The implementation deadline has been well-known in the industry for several years, yet, uncertainty is increasingly characterising the market as 2020 creeps closer. Heightened bunker price volatility has become a new normal in the second half of 2019 with the HSFO price in Singapore plummeting 45% in less than a month.“The bunker price spread illustrates the tumultuous ride that the bunker market has endured in the last couple of months and similarly, the spread illuminates why the market is filled with uncertainty about the future,” Peter Sand, BIMCO’s Chief Shipping Analyst, said, adding that from October 1 to November 1, the spread for HSFO-MGO LS in Rotterdam widened 21%, from USD 229 to USD 277 per metric tonne.Lightning struck the market repeatedlySeemingly, a lightning struck the HSFO market towards the end of June. Over the course of 14 days, the price for HSFO rose USD 132 per metric tonne from USD 370 to USD 502 in Singapore. A massive price change, considering the stability of the market in the preceding 6 months, BIMCO noted. In the weeks to follow, prices cooled off and dipped to a mere USD 330 per metric tonne, which was, at the time, the lowest point since 2017.The HSFO price went on the recover and rose above its previous levels during August and early September. Then, on September 14, 2019, lightning struck the market again, although this time in the shape of a drone strike on the Saudi Arabian Abqaiq oil facilities.Brent crude spiked 20% initially with the bunker market following suit. The HSFO price in Singapore spiked to a whopping USD 590 per metric tonne on September 17, 2019. However, the peak was short lived and dipped back to lower levels, bottoming out at a new yearly low of USD 323 per metric tonne on October 10, 2019.“Geopolitical events, such as the attack in Saudi Arabia, certainly impose shocks on the bunker oil market, but recent movements in the HSFO-MGO LS spread cannot solely be laid at the feet of geopolitics. Seemingly, the uncertainty of the IMO 2020 regulation is disrupting the normal market conditions to a certain extent. Anecdotal evidence suggests that, in some ports, greater efforts have been made to store MGO LS on bunker barges, tightening the market for HSFO,” Sand said.Varying availabilityAvailability of fuels will vary greatly in between ports and greatly influence bunker prices, BIMCO explained. Some ports, such as Singapore, are increasingly focused on storing MGO LS. The consequence is decreasing supplies of HSFO, which potentially contributes to fluctuations in price. This effect may have caused the price difference for HSFO between Singapore and Rotterdam to go on the roller coaster ride in the second half of 2019.The price difference between the two ports peaked on September 17, 2019 at USD 162 per metric tonne. Shortly thereafter, the price difference plummeted, bottoming out at USD 13 per metric tonne on October 10, 2019.Bunkering in the western hemisphereAt the Panama Canal, one of the main bunkering hubs in Central America, a similar development has taken place. MGO LS prices have remained relatively stable through 2019, whereas the price for HSFO, in the second half of 2019, has fluctuated considerably in the USD 300-500 per metric tonne range with the spread widening to a level on par with price of HSFO.Knowing about the different price levels between ports enables shipowners to save massive amounts on their fuel oil bill if bunkering operations are scheduled optimally, BIMCO informed. However, the recent volatility of prices and the chance of fuel non-availability in ports will certainly challenge optimal bunkering operations in the coming year.BIMCO explained that it is no longer fundamentals driving the market, but rather a market dictated by uncertainty, speculation and general fear of where the bunker market is heading.“A market no longer operating by fundamentals will be hard to forecast. Instead, we can construct potential scenarios, but even then, reality rarely conform to our assumptions.”Shipowners are ready, are bunker suppliers?Conflicting narratives are circulating in the market, as IMO 2020 draws close. BIMCO recently reported, that while shipowners are ready for the upcoming sulphur regulation, the bunker market is not.“Availability will vary significantly between ports and adequate supply in main bunkering hubs may not be enough to cushion the blow from IMO 2020. Conversely, others are expecting less disruption from the new regulation and expects to continue onward with business unhindered.”Many owners seeking to pass on their added fuel costs might be faced with a rude awakening if the markets are not in the best possible balance, BIMCO said, underlining that owners can only pass on their added costs, if the market fundamentals are balanced accordingly.“No matter the outcome, IMO 2020 will surely mark a period of change, both on the regulatory and operational side.”last_img read more

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CTO Secretary General highlights opportunities through partnership

first_imgLocalNews CTO Secretary General highlights opportunities through partnership by: – July 4, 2011 Tweet Share 9 Views   no discussions Sharecenter_img Share (Roseau Dominica – July 4, 2011) Mr. Hugh Riley, Secretary General of the Caribbean Tourism Organization (CTO) met with representatives of the Ministry of Tourism, Discover Dominica Authority (DDA), Dominica Hotel & Tourism Association (DHTA), and Ministry of Trade on Thursday June 30, 2011.  During the presentation, appropriately titled “What Happens To Your Money”, Mr Riley outlined some benefits available to CTO members through marketing, human resource development and training, and advocacy representation, among others.  Through its Human Resources department, CTO is proposing the Total Visitor Satisfaction (TVS) programme, which proposes destination certification on a series of criteria, including user-friendliness, local accessibility, environmental responsibility, and overall visitor appeal.  TVS aims at making the Caribbean a region of clean, efficient, environmentally conscious, hospitable destinations focused on satisfying current visitors, generating repeat business, and encouraging them to become ambassadors for our countries. Whispers from Locals, is a new marketing programme that allows travellers to discover insider destination information not usually found on websites or in brochures or magazines through stories and tips as told by locals.  The Caribbean Tourism Development Company (CTDC) is another marketing avenue used by the CTO, in partnership with the Caribbean Hotel & Tourism Association (CHTA) to promote, protect, advance, and enhance the Caribbean brand through web, print, trade and consumer shows, advertising programmes and extensive public relations coverage of the region and individual destinationsThe private sector representatives showed great interest in the Caribbean Hotel Energy Efficiency Action Programme (CHENACT), a two year programme meant to drive the Caribbean hotels to implement energy efficient practices.  Although the programme is coming to a close the CTO, CHTA, and Caribbean Alliance for Sustainable Tourism (CAST) are seeking funding to implement another round.Over the last few years, the CTO has been championing the lobby to the United Kingdom government against the new Air Passenger Duty (APD) on behalf of the region and the Secretary General was pleased to announce the progress, and noted that the organization continues to address concerns in the region related to access into and within the region. Following the presentation, Mr. Riley and DDA CEO, Colin Piper hosted members of the local media in a short press conference.Photo credit: onecaribbean.orgPress ReleaseDiscover Dominica Authority Sharing is caring!last_img read more

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