Bunker Prices Drop Below US$600 Per Tonne

by Lloyd's List - last modified Jun 14, 2012 12:53 PM

Owners are now paying US$596 per tonne for 380 cSt fuel from the main Middle East bunkering hub in Fujairah, Greek shipbroker Optima said on Monday.

By comparison, bunker prices were around US$650 two weeks ago and hit an all-time high of US$763.50 in February.

The sharp price drop is linked to the fall in the oil price last week, caused by fears of falling oil demand from China after the country’s economy and manufacturing slowed.

The oil price rallied slightly this week on news of the Spanish eurozone bailout but it is still lower than it has been for more than a year.

Shipowners and operators, particularly in the tanker industry where earnings have been suppressed for a while, welcomed lower bunker prices.

“It’s good news; it helps us a lot,” said Hafnia Tankers chartering manager Jesper Mortensen.

On certain routes, daily earnings can rise by US$1000 per day if the bunker price falls, he said.

“So it’s got a huge impact for us.”

Analysts have said lower bunker prices will lead to vessels speeding up because owners will see it as an opportunity to get cargo ahead of their competitors, covering the increase in fuel use with the rise in income from the voyage.

Vessels speeding up could have a detrimental effect on the supply demand balance in the market, because ships will become available for employment quicker, exacerbating competition for cargoes and driving freight rates down.

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