Generic Hero BannerGeneric Hero Banner
Latest market news

HSFO oversupply widens scrubber spread

  • Market: Oil products
  • 14/04/21

Ample supply of high-sulphur fuel oil (HSFO) in northwest Europe has widened the "scrubber spread" between the price of 3.5pc sulphur product and IMO-compliant 0.5pc fuel oil.

The price of delivered HSFO in Rotterdam has declined by nearly $20/t since 26 March, but 0.5pc fuel oil has risen by $5/t over the same period, broadening the spread between the two grades from under $90/t in late March to $111/t yesterday, the widest in a month.

Abundant supply has weighed on HSFO margins to crude in recent weeks, with the notional discount to front-month Ice Brent futures hitting an 11-month low of $10.96/bl on 9 April. A flurry of cargoes taking HSFO from the Baltic Sea to the Amsterdam-Rotterdam-Antwerp (ARA) trading and refining hub has piled pressure on margins because export opportunities remain limited. Baltic Sea fuel oil exports to ARA reached a 17-month high of 1.33mn t in March, up from 915,000t in February, according to Vortexa data.

Fading transatlantic demand for Russian Baltic fuel oil drove the cargoes to northwest Europe. And this rise in inflows from the Baltics coincided with fewer arbitrage departures from ARA to Singapore, the world's largest buyer of marine fuels. Meanwhile, Middle East demand was the main supporter of European HSFO margins in March, with around 610,000t of fuel oil exported from ARA to the Middle East last month, the highest since at least 2018 according to Vortexa.

The bigger the discount for delivered HSFO to 0.5pc fuel oil, the quicker the payback time for a shipowner who has purchased a scrubber. Scrubbers are marine exhaust gas cleaning systems that have allowed ships to continue burning HSFO since the IMO's 0.5pc sulphur cap came into force last year. At the start of 2020, Rotterdam's scrubber spread was above $300/t. But when the onset of the Covid-19 pandemic triggered a collapse in transport fuel demand in March last year, the spread narrowed and spent most of 2020 under $70/t.

The price of 0.5pc fuel oil fell significantly last March as bunker demand declined, but HSFO values received support from export demand for use in US cokers and for power generation in Asia. The narrowing spread last year led to scrubber demand dropping off after a rush of orders ahead of the IMO cap. According to data from shipping classification firm DNV GL, the number of ships fitted with scrubbers shot up in 2019-20, with over 4,375 in operation or on order globally at the end of last year, compared with just 731 at the end of 2018, but that tally will go up by fewer than 200 this year.

HSFO consumption in Rotterdam was strong in the last quarter of 2020 after ships retrofitted with scrubbers during the year returned to sea. But with few scrubber-fitted ships set to return to service this year, HSFO bunker demand may have peaked. Bunker demand in Europe has been weak this year, with HSFO supply in Dutch ports more than a third lower in January than in December, according to the latest data from Statistics Netherlands.

Rotterdam 'scrubber' spread

Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
28/02/25

Low flood risk expected for upper Mississippi River

Low flood risk expected for upper Mississippi River

Houston, 28 February (Argus) — The spring flood risk is low along the upper Mississippi River, as area soils and streams have amble capacity to accommodate seasonal precipitation, according to the National Weather Service (NWS). Precipitation in the Corn Belt has been below normal this winter, keeping the region abnormally dry, the NWS said Thursday in its second Spring Flood Outlook . Minimal snow pack has formed in the Northern Plains following lackluster winter precipitation. Both these factors have reduced the risk for March-April flooding along the upper Mississippi River. Around 0-2in of water equivalent are in the snowpack along the northern stretches of Minnesota, Wisconsin and Michigan. In addition, stream flows are below normal, giving them more capacity to handle spring rains and snow melt. In other areas of the Corn Belt and the Northern Plains, unfrozen soil is expected to soak up precipitation, asmoisture levels remain below normal. Southern Illinois and Missouri have no frozen soil, completely thawing since the previous outlook . Iowa has 16-24in of frozen soil, slightly higher over the past two weeks. Northern states such as Minnesota and Wisconsin still have an average of 24-36in of frost depth. These states have the entire month of March to defrost and gain moisture levels, since the majority of spring planting for the Corn Belt begin in April. Normal precipitation is projected for the upper Mississippi River basin through the first half of March, according to the NWS' Climate Prediction Center. The seasonal temperatures outlook for March-April are near normal, while precipitation is anticipated to be above average. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Find out more
News

Weak demand weighs on Singapore bio-bunker prices


28/02/25
News
28/02/25

Weak demand weighs on Singapore bio-bunker prices

Singapore, 28 February (Argus) — Bio-bunker prices at the port of Singapore edged down by 1pc on the month in February on the back of weak demand from shipowners and lower fuel oil values. The price of B24 — a blend of 24pc used cooking oil methyl ester (Ucome) and 76pc very low-sulphur fuel oil (VLSFO) — averaged $698.7/t on a delivered on board (dob) basis, down by almost $10/t compared with January. Spot demand in Singapore remained thin throughout February following the lunar new year celebrations, and shipowners continued to mostly purchase through term contracts. B24 dob Singapore prices averaged $703.8/t in January-February, compared with the 2024 average of $729.5/t. The slow trading activity in February was coupled with a 3pc month-on-month slump in very low sulphur fuel oil (VLSFO) cargo prices to an average of $549.1/t fob Singapore. The delivered premium for B24 versus VLSFO cargo prices was 5.7pc higher on the month at $149.6/t. Ucome prices in China bucked the trend, rising by 2.6pc on the month to average $1,084.7/t fob China in February. Ucome prices in China have been rising in recent days and ended the month at about $1,115/t. Singapore continues to be one of the most competitive ports for shipowners as regional sellers compete to offer bio-bunker prices below other ports, but it lost some ground against ports in China and the EU in February. B24 VLSFO blend prices in Guangzhou were $149.6/t above Singapore values on average in February, which was 3.6pc lower than the January premium, while ARA premiums over Singapore slipped by 16.7pc on the month to $99/t. By Mahua Chakravarty Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

US seeks to dismiss suit about RFS delay


27/02/25
News
27/02/25

US seeks to dismiss suit about RFS delay

New York, 27 February (Argus) — The US has asked a court to dismiss a case over a missed deadline for updating the Renewable Fuel Standard (RFS), a move that could portend further delays in setting new biofuel blend mandates. Ethanol industry group Growth Energy and biomass-based diesel group Clean Fuels Alliance America sued late last year, asking the US District Court for the District of Columbia to compel the US Environmental Protection Agency (EPA) to set required renewable fuel volumes for 2026. Under the Clean Air Act, the government must set new RFS mandates at least 14 months in advance of a compliance year. Lawyers for EPA and the US Department of Justice in a court filing this week agreed that President Donald Trump's administration is behind the legal schedule for updating the program. But they said that the biofuel groups registered their discontent too early, submitting notices of intent to sue before EPA had missed the deadline, and that the case should be dismissed on those technical grounds. The Clean Air Act allows groups to sue the government 60 days after filing these notices, but the Trump administration is arguing that the law only authorizes suits after notice of an existing — not prospective — harm. "The anticipatory pre-violation letters plaintiffs sent here fail to provide notice of any actual violation," the filing argues. Growth Energy and Clean Fuels' respective notices to the government came in July last year, months before the agency missed its Clean Air Act deadline. But both notices pointed to a plan from President Joe Biden's administration to finalize new RFS volumes more than a year behind schedule in December 2025. The groups must now respond to the government's dismissal request, delaying the case's ultimate resolution. Biofuel groups have long been at loggerheads with EPA over its delays implementing the program, which requires oil refiners and importers to blend biofuels into the conventional fuel supply, but the government's new legal strategy differs from recent cases. In 2022, Growth Energy sued the administration of President Joe Biden first over its delays finalizing 2021-2022 volumes and then again later that year over late 2023 volumes. In both those cases, EPA published a proposed consent decree in the Federal Register within 30 days of the biofuel group's respective complaints to the court. In the first case, EPA finalized new blend mandates within four months of Growth Energy's filing, and in the second case, EPA finalized volumes within 14 months. The timing of notices of intent to sue does not appear to have come up in those cases, even though Growth told EPA in one notice it could sue over 2022 volumes a few weeks before the agency had missed the deadline. The Trump administration's apparent efforts to avoid negotiating an agreement in the new case suggests that final volumes for 2026 and beyond could take longer than market participants have expected, adding to deep uncertainty in the sector about future policy incentives. Multiple biorefineries have idled or shut down in the past year. Trump's efforts to cut much of the federal workforce and slash spending could also impact EPA's timeline for updating the RFS, a highly technical program that has historically proven vulnerable to legal challenges. The longtime director of EPA's fuel programs office left the government late last year. EPA did not immediately comment on its timeline for proposing or finalizing new RFS volumes. By Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Upper Mississippi River ice thickens before March


27/02/25
News
27/02/25

Upper Mississippi River ice thickens before March

Houston, 27 February (Argus) — Ice measurements near the upper Mississippi River were thicker than the previous readings, the US Army Corps of Engineers (Corps) reported on 26 February. The Lake Pepin ice depth results traditionally help determine when the upper Mississippi River will reopen for spring transit. The second ice measurements taken this week revealed deeper ice than the week prior . The ice along mile 770 of the lake thickened by 1in to 20in which is also thicker than the same time last year. This measurement is 4in more than the five-year average for the period and slightly above average for overall ice thickness for this time of the year, according to the Corps. Nevertheless, ice did melt at the ends of the Lake because of warmer temperatures this week. If high temperatures and winds continue through the coming weeks, Lake Pepin's ice will begin to dissipate, said Corps civil engineering technician Alan Vanguilder. But should temperatures fail to increase by mid March, the reopening of the upper Mississippi could be delayed. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

UK 2024 bitumen consumption drops 10pc


27/02/25
News
27/02/25

UK 2024 bitumen consumption drops 10pc

London, 27 February (Argus) — UK bitumen consumption fell by 10.5pc last year compared with 2023 and hit the lowest level since 2016, data from the UK government's department for energy security and net zero (DESNZ) shows. The UK consumed 1.38mn t of bitumen in 2024. In the fourth quarter bitumen demand fell by 5.4pc to 322,000t compared with the same period of 2023, although December consumption rose by 3.75pc on the year to 83,000t. The fall in 2024 continues a downward trend in bitumen consumption since 2021 in the UK. Domestic consumption fell by 25.1pc between 2021 and 2024 and production dropped by 38pc over the same period, despite a rise in production last year. Production rose by 20.3pc on the previous year to 449,000t in 2024, despite lower fourth quarter output, when the UK produced 51,000t of bitumen, 16.3pc lower than in the fourth quarter of 2023. The highest output was in the second quarter last year, with the highest quarterly output since the second quarter of 2021. Output during the winter months tends to drop as cold weather halts much road building and maintenance. Insufficient government funding for road paving projects is limiting bitumen demand. UK finance minister Rachel Reeves allocated £500mn ($631mn) to road maintenance in October, but England alone needs £14.4bn as a one-time catch up cost, according to industry organisation the Asphalt Industry Alliance. By Tim van Gardingen Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more