Bunker Shortage in East Asia Spurs Longer Voyages, Higher Ton Mileage for VLGCs
Very Large Gas Carriers (VLGCs) are heading south to Singapore to refuel as bunker supplies at certain ports in East Asia come under pressure, according to a report by KPI OceanConnect and shipbrokers on Thursday.
As a result, fewer vessels are opting to travel back to the U.S. Gulf Coast via the Panama Canal and instead are transiting back via the Cape of Good Hope.
“Some suppliers have ceased offering [Very Low Sulfur Fuel Oil] VLSFO until further notice,” KPI OceanConnect said with reference ports in Hong Kong. “Serious situation in Korea. No stock avail[able] for [High Sulfur Fuel Oil] HSFO,” the company said in the report.
A voyage time for a VLGC travelling from Ningbo to Houston via the Panama Canal is around 29-30 days, while a voyage via the Cape of Good Hope will take around 14 days longer, OPIS calculations show. The 5,000 nautical mile detour has already sent a shock through VLGC spot freight rates out of the U.S. Gulf.
The OPIS-assessed Houston-Chiba via Panama spot VLGC rose by double digits on a metric ton basis on Thursday, with a fixture recorded in the low-to-mid $140s/mt. And voyage costs from the U.S. Gulf to Northwest Europe were also impacted, with the OPIS assessment rising just short of $10/mt day-on-day to close.
As of Thursday afternoon, there were at least seven VLGCs heading down from China to Singapore, while one other was already in the region refuelling, data from shipping analytics firm Vortexa showed.
Another five have already passed Singapore from China and South Korea and are heading towards the Cape of Good Hope, all destined for the U.S. Gulf.
The reported shortage of bunker fuels in China, Japan and South Korea has resulted in more pressure placed on Singapore, Houston and Rotterdam as the main bunkering points, one London-based LPG broker noted.
The OPIS-assessed Singapore VLSFO and Marine Gasoil (MGO) markers closed at $1,120/mt and $1,840/mt, respectively, on Thursday, rising by $80/mt and $130/mt from Wednesday.
In the Port of Rotterdam, Europe's largest bunkering port, HSFO and VLSFO were assessed at $612/mt and $671/mt, respectively, on Thursday, compared $541/mt and $598/mt a week earlier, according to OPIS pricing data.
Reporting by Jamie Aldridge, jaldridge@opisnet.com, Stacy Maphula, smaphula@opisnet.com; Editing by Rob Sheridan, rsheridan@opisnet.com