Following a weak second quarter, exports of heavy fuel oil from Rotterdam to Asia accelerated fairly suddenly by close on two million tonnes in just a couple of weeks. This was despite a current price difference for HFO (‘heavy fuel oil’) of $10 per tonne between Rotterdam and Singapore. Normally, this difference is on the tight side to make operations profitable when delivering to bunker boats. However, due to a combination of factors, the ‘arbitration window’ is fortunately ajar again for traders.
Margins
For a ship’s cargo – hundreds of thousands of tonnes - the price differences are greater than for a bunker cargo of 10,000 tonnes at the most. In addition to this, traders work on the basis of the price on delivery in Singapore in August/September , and the viscosity – the more viscous, the cheaper - also produces a margin.
The reduction in the Russian export tariffs for fuel oil as of 1 July and the increased supply, partly as a result of this, are providing a boost on the purchasing side. Decisive, however, is the fall in charter prices, which happened a few weeks ago. One of the VLCCs that has just departed was, for example, ‘fixed’ for $3.5 million, while the price a number of weeks ago was between $4.5 and 5 million. That makes a difference of between $3.50 and $4 per tonne of cargo. The ‘Front Champion’, which will arrive shortly, has been booked by a German trader for $3.4 million, or $12.50 per tonne of cargo. On top of this, there will be a surcharge for the viscosity of around $7.50. Given a price difference of $27-28 between east and west in August, this will give a margin of $7-8 per tonne. To earn this, some trading capital is needed; approximately $100 million for a fully-loaded VLCC.
Two million
In the past seven days, three VLCCs (Very Large Crude Carriers), including the ‘Maersk Newton’, an Aframax and a Panamax tanker, set sail. They left the Europoort area loaded, jointly, with a million tonnes of heavy fuel oil. Two VLCCs are currently being loaded at Vopak Europoort. On 10 August, the VLCC ‘Front Champion” will arrive and perform ship to ship transfers from smaller tankers at Dolphins 80 in the Caland Canal. The three large VLCCs - all more or less the same size - will set sail with a joint cargo of approximately 830,000 tonnes.
Margins
For a ship’s cargo – hundreds of thousands of tonnes - the price differences are greater than for a bunker cargo of 10,000 tonnes at the most. In addition to this, traders work on the basis of the price on delivery in Singapore in August/September , and the viscosity – the more viscous, the cheaper - also produces a margin.
The reduction in the Russian export tariffs for fuel oil as of 1 July and the increased supply, partly as a result of this, are providing a boost on the purchasing side. Decisive, however, is the fall in charter prices, which happened a few weeks ago. One of the VLCCs that has just departed was, for example, ‘fixed’ for $3.5 million, while the price a number of weeks ago was between $4.5 and 5 million. That makes a difference of between $3.50 and $4 per tonne of cargo. The ‘Front Champion’, which will arrive shortly, has been booked by a German trader for $3.4 million, or $12.50 per tonne of cargo. On top of this, there will be a surcharge for the viscosity of around $7.50. Given a price difference of $27-28 between east and west in August, this will give a margin of $7-8 per tonne. To earn this, some trading capital is needed; approximately $100 million for a fully-loaded VLCC.
Two million
In the past seven days, three VLCCs (Very Large Crude Carriers), including the ‘Maersk Newton’, an Aframax and a Panamax tanker, set sail. They left the Europoort area loaded, jointly, with a million tonnes of heavy fuel oil. Two VLCCs are currently being loaded at Vopak Europoort. On 10 August, the VLCC ‘Front Champion” will arrive and perform ship to ship transfers from smaller tankers at Dolphins 80 in the Caland Canal. The three large VLCCs - all more or less the same size - will set sail with a joint cargo of approximately 830,000 tonnes.