Evgenia Vanadzina Gasum

Evgenia Vanadzina

Analyst
evgenia.vanadzina@gasum.com
tel. +358401801066

22.04.2020  

Maritime market update: Scrubber installations are on hold due to low oil prices

Risavika LNG index was down 1.6 % on lower European gas market prices week on week. The spread of covid-19 and mild weather continue to put pressure on LNG demand, while supply side remains quite healthy. There is still not enough demand to absorb all available LNG.

As OPEC+ agreement did not bring required support to the oil market, oil products front monthly prices were further down last week on low demand due to covid-19. FO 3.5 front month traded at 125.25 USD/t, 18 % lower, while low sulphur products lost 5-8 % compared to previous week. Stocks of fuel oil in the ARA hub increased 4.5% to 1.540 million mt last week, according to data from Bunkerworld, reaching over a 21-month high.

Low sulphur fuel oil price (MFO 0.5) went down by 50 % since the beginning of the year and has reached the level of fuel oil (FO 3.5) in January, when it was trading at 230 USD/t. This dynamics makes some shipowners to put installation of scrubbers on hold. Shipping company Stolt-Nielsen announced that it would cancel scrubber installations where possible. The company has identified 30 million USD of capital expenditure that can be cut in its tanker division, where scrubber installations have been the main capital cost.

 

Front month price index

LNG Risavika* FO 3.5 FOB Rdam MFO 0.5 FOB Rdam MGO 0.1 FOB ARA ULSD FOB ARA Unit
17.00 8.98 15.43 18.09 19.70 EUR/MWh
287.91 125.25 224.76 263.50 274.83 USD/t

 

LNG Risavika - LNG FOB Risavika 

FO 3.5 FOB Rdam – European 3.5% Fuel Oil Barges FOB Rdam (Platts) Futures Quotes

MFO 0.5 FOB Rdam - European FOB Rdam Marine Fuel 0.5% Barges (Platts) Futures Quotes

MGO 0.1 FOB ARA - Gasoil 0.1% Barges FOB ARA (Platts) Futures Quotes

ULSD FOB ARA - European Diesel 10 ppm Barges FOB ARA (Platts) Futures Quotes

Source: CME Group, Gasum, Bunkerworld, Ship&Bunker

*An estimate for LNG FOB Risavika 

 

Price index 20.4.2020_maritimemarket.png

 

This is a maritime market update published every week. Writer is Evgenia Vanadzina, Analyst at Gasum.