For past one year, there has been a steady decline in low sulphur marine gas oil prices. Earlier, experts had predicted that the transition to low sulphur fuels would increase fuel costs, as it was more expensive to produce cleaner fuels than heavy fuels. Hence it was estimated that it would result in large scale non-compliance, increased bunker surcharges, increase in freight charges to offset the fuel cost.
Surprisingly, the cost of LSMGO at Rotterdam is at its lowest level in the past six months.
The peak price declined to $468 per metric tonne (pmt) from its peak price of $603 in early May is an overall decline of $135 pmt. It is noteworthy that the key differential between high and low sulphur fuel costs outside European and North American ECAs was $190 pmt, and in the US the price differential continues to narrow down. This has been noted to be the narrowest differential since the 0.10% sulphur limit for ECA compliant bunker fuels came into force at the start of this year. Earlier this year, the differential was a whopping $318.
An EU database shows that a mere 6% of inspected ships had breached the sulphur norms between January and April 2015.