Quality Concern Strikes Bunker Fuel Market

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  • Doubts over the quality of the bunker fuel have resurfaced among market participants as floating storage continues to be high in Asia and elsewhere.
  • This rising concerns are due to persistent weakness in prices and tepid demand, as countries worldwide grapple with the coronavirus pandemic.
  • Quality issues saw heightened focus, with sediment issues appearing at the heart of such concerns during the IMO’s global low sulfur mandate, from Jan 1, 2020.
  • Commingling of bunker fuels should be avoided.
  • If commingling is considered necessary, then more detailed tests should be carried out to assess whether the fuels are likely to be compatible.

A recent news reported by Surabhi Sahu and Amy Tan in the Platts highlights the issues such as floating storage build-up that is quite high in Asia, sludge problems, sedimentation due to long term storage and commingling of fuels.

The quality of the fuel may decline

“A shipowner won’t usually store [LSFO’s] for a long time but a supplier could. However, if you store it for very long like six months or so, the fuel starts giving way,” a shipowner source said July 27.

“Three months down, you may need to put a lot of additives to burn it,” he added.

How much of the stocks are in Singapore?

Around 5 million mt of fuel oil stocks are sitting in VLCCs around Singapore alone, S&P Global Platts reported on July 13, citing trader estimates.

“There is lots of oil that is still unsold and has been stored since March or April this year when the market was in deep contango … that batch of oil has got to be somewhere in the market now. So quality issues are bound to happen,” a Singapore-based bunker trader said late last week.

Low bunker fuel prices 

  • Meanwhile, bunker fuel prices have remained subdued as demand is tepid.
  • The Singapore-delivered Marine Fuel 0.5%S, for example, averaged $658.76/mt in January compared to an average of $334.24/mt from July 1-24, Platts data showed.

Low quality fuel impact

  • Global alerts have been issued relating to sediment within VLSFO fuels.
  • The sediment issues are mainly for LSFO stored in floaters.
  • After about 90 days of storage, asphaltenes start to precipitate and sludge problems could develop.
  • The sludge formed may then block a ship’s filters and pipework and starve the engine of fuel.
  • The fuel stability and the total acid number are also adversely impacted.
  • Big trading companies such as Hin Leong, who were holding onto and trading huge quantities of oil, have collapsed.

Quality check 

Bunker fuel quality issues worldwide could be limited if shipowners and operators exercised more caution, say industry experts.

“We are still waiting to see how the quality of the LSFO been stored onboard floating storage for a prolonged period (6-12 months) will be impacted in the end,” another bunker supplier said.

It is imperative to select reliable suppliers so that fuel quality is assured, they said, adding that suppliers should provide assurance that they will adhere to the ISO 8217 requirements for the grade ordered.

“It is still too early to say but we would recommend bunker consumers to stay vigilant and keep close focus on certificate of quality and pre-tests,” he added.

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Source: Platts

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