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Argus launches low-sulfur fuel oil price assessment

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Dry Bulk,

Global energy and commodity price reporting agency Argus today launched a low-sulfur fuel oil (LSFO) price assessment for the shipping fuel market in Singapore.

The Argus LSFO 0.5%S price is the first assessment to be launched for new fuels needing to comply with lower sulfur limits for the shipping sector being introduced by the International Maritime Organisation (IMO). The IMO’s new regulation – designed to reduce air pollution – will reduce the maximum sulfur content of marine fuels to 0.5% from 3.5% from 1 January 2020.

Some coastal regions already have Emission Control Areas with a 0.1% sulfur limit, but the global limit of 0.5% is expected by many to cause major disruption to the marine fuels industry, which will require new fuels and new price benchmarks against which to assess them.

Argus has partly attributed its initial focus on the Singapore market to its size — at 4 million tpm Singapore’s bunker fuel market is four times bigger than the next largest centres, at the ports of Rotterdam, the Netherlands, and Fujairah, the United Arab Emirates. It is also partly because of the introduction of mass flow meters by the Maritime and Port Authority of Singapore in 2017, which require all bunker barges to deliver fuel oil through a calibrated meter, providing a level playing field for all suppliers and resulting in highly competitive pricing.

Argus’ LSFO 0.5%S assessments will be for deliveries taking place 4 – 12 days from the trade date, with cargo sizes between 500 t and 3000 t, and maximum viscosity of 180cst. In the absence of physical trade indications, and until a more liquid market emerges, Argus will assess the value based on a 7:1 blending ratio of existing low-sulfur marine gasoil 0.1%S and high-sulfur fuel oil 380cst assessments.

With the name, specifications and methodology now known, Argus LSFO 0.5%S can be referenced in contracts that extend into 2020.

“The Singapore bunker market has needed an independent source of pricing that they could reference in physical contracts that extend into 2020. The new LSFO 0.5%S price provides the solution for the bunker community. With assessments based on dozens of transactions each day, Argus will continue to provide reliable assessments and closely monitor the development of traded markets in IMO 2020 compliant fuel,” Argus Media Chairman and Chief Executive, Adrian Binks, said.

The assessment is available in the Argus Marine Fuels market reporting service.

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