Despite fears of a second wave of COVID-19, fuel markets rebounded last week, showing signs of improving fundamentals as global supplies continue to tighten.
MABUX Global Bunker Index for 380 HSFO rose slightly from $283/MT on June 18 up to $286/MT today, Jun.25 (plus $3), VLSFO – added 4 USD (from $337/MT to $341/MT), MGO LS gained $8 (from $411/MT to $419/MT). Meanwhile, the pace of upward evolution has slowed somewhat and the last two days we have seen even moderate decline.
The average VLSFO-HSFO global spread (Scrubber Spread (SS)) has increased slightly during the week and stands at 46.98 USD (+3.02 USD for index a week ago). In Rotterdam weekly SS has narrowed again to 49.29 USD (-21.67 USD), while in Singapore SS index stands steady: plus 2.94 to 70.13 USD.
It looks that scrubber’s story may come to an end. The next Marine Environment Protection Committee meeting (the International Maritime Organization (IMO) is currently working on a revised meeting schedule for the rest of 2020) is an opportunity for IMO to decide when, where, or even if scrubber discharges should be allowed.
However, recently the International Council on Clean Transportation (ICCT) outlined the four-step process that the IMO should follow under a scrubber workplan:
(1) Prohibit new scrubber installations,
(2) Convert existing open-loop scrubbers to closed-loop,
(3) Prohibit closed-loop bleed-off water discharges in places that should be protected and, finally,
(4) Phase out existing scrubbers over time. This process could take several years to negotiate and, if agreed, another two years to become enforceable. Meantime, Clarksons reported up to 700 scrubber retrofits may be cancelled or postponed.
All in all, the global fuel market is at a crossroads: if demand continues to improve, the fuel market has a lot more to go on the upside; but if there is a situation where countries start to take steps back with the coronavirus, the market is going to go down.
Connect with Mabux on Twitter:Tweets by "MabuxAB"