Marine Fuels Price Assessment Explained

What is Marine Fuel 0.5%?

Marine fuels 0.5% is a new blend of fuel designed for use worldwide once the global sulfur limit drops to that level in January 2020. A wide range of these blends is likely to emerge with varying specifications.

Interregional trade flow balances

How we assess Marine Fuel 0.5%

S&P Global Commodity Insights assessment process for 0.5% marine fuel is the same as high sulfur fuel oil (HSFO) – 3.5% sulfur fuel oil, marine gasoil (MGO), ultra-low-sulfur fuel oil (ULSFO).

Marine fuel 0.5% price assessments reflect the tradable, repeatable spot market value of the most competitive grades in Europe, US, and Asia at the close.

We publish bids, offers, expressions of interest to trade, and confirmed trades during our Market on Close assessment process every day. This information is summarized in our daily newsletters and is published in full on our real-time information service, Platts Global Alert.

Marine Fuel 0.5% ⁠- Barges/Cargoes ⁠- Americas & International

Americas

S&P Global Commodity Insights will only publish bids, offers and intents to trade for the Platts Market on Close assessment process for marine fuel 0.5% on a $/Mt basis effective July 1, 2019.

S&P Global Commodity Insights will continue to publish the existing USGC and USAC assessments for marine fuel 0.5% on a $/b basis and will derive these assessments by converting the $/mt assessments using the existing conversion rate of 6.35B/mt.

S&P Global Commodity Insights will continue to review the conversion rate as the market and specifications evolve. There will be no change to the existing USGC HSFO assessment or any other Platts residual fuel oil assessments in the Americas, which will continue to be published in $/b.

International

As of January 2, 2019, S&P Global Commodity Insights launched a suite of new daily assessments for cargoes and barges around the globe for residual marine fuels that reflect a maximum sulfur limit of 0.5%.

The launch of cargo and barge assessments came 12 months ahead of the IMO's new global sulfur limit –in response to strong demand from market participants around the world for visibility into how this new fuel will be valued by the market.

S&P Global Commodity Insights received feedback from a cross-section of stakeholders including refiners, shipowners, physical suppliers, traders, exchanges, government agencies, brokers, storage terminal owner/operators, and utility companies. Following extensive consultation, on March 26, 2018, the methodology and specifications were announced for the cargo assessments to be launched at the start of 2019.

The new cargo and barge assessments are named "Marine Fuel 0.5%", and are being published for product loading from the key hubs of Singapore, Fujairah, Rotterdam, Houston, and New York Harbor.

The new assessments reflect specifications for RMG fuels as defined by the International Organization for Standardization (ISO) 8217:2010 specifications, but with a sulfur cap of 0.5%. While specifications are still evolving, S&P Global Commodity Insights has standardized the reference conversion factor for these new price assessments as 6.35 barrels per metric ton, aligned with the conversion factor for other fuel oil assessments at these locations.

The new assessments reflect existing parameters for volume, delivery period, size, and pricing basis for HSFO cargoes in Singapore and Fujairah, and HSFO barges in Houston, New York Harbor, and Rotterdam. While S&P Global Commodity Insights reported bids and offers for this fuel in January, these new markets are for the moment generally thinly traded. In the absence of an active spot market, the new assessments reflect the tradeable value of low sulfur marine fuels, established using the information on blend economics from related fuels as an important reference point.

Our 0.5% sulfur marine fuel assessments can be accessed on Platts Global Alert using the codes below:

AMFSA00 (Singapore) AMFFA00 (Fujairah) PUMFA00 (Rotterdam)

AUGMA00 (US Gulf Coast) AUAMA00 (US Atlantic Coast)

Marine Fuel 0.5% - Derivatives

S&P Global Commodity Insights launched assessments for financially settled derivatives contracts that settle against its physical Marine Fuel 0.5% assessments in Asia, the Middle East, Europe, and the US.

The derivatives assessments reflect contracts that settle against the average of the respective underlying physical assessment in each region that are listed below. The metric ton-to-barrel conversion factor for the derivatives contracts is 6.35 -- in line with the conversion factor for Platts physical Marine Fuel 0.5% assessments by S&P Global Commodity Insights and with the prevailing qualities of fuel oil.

ASIA: The underlying physical assessment is "FOB Singapore Marine Fuel 0.5%" (Price database code: AMFSA00). S&P Global Commodity Insights publishes derivatives assessments for balance month, 12 subsequent months, inter-month spreads and four quarters from the month of publication. In addition, S&P Global Commodity Insights publishes a MOPS strip for Marine Fuel 0.5% as well as a FOB Singapore Marine Fuel 0.5% differential to the strip.

MIDDLE EAST: The underlying physical assessment is "FOB Fujairah Marine Fuel 0.5%" (Code: AMFFA00). S&P Global Commodity Insights publishes derivatives assessments for balance month and two subsequent months. In addition, Platts publishes a MOPFUJ strip for Marine Fuel 0.5% as well as a FOB Fujairah Marine Fuel 0.5% differential to the strip.

EUROPE: The underlying physical assessment is "FOB Rotterdam Marine Fuel 0.5% Barge" (Code: PUMFD00). S&P Global Commodity Insights publishes derivatives assessments for balance month, 24 subsequent months, inter-month spreads, eight quarters and two calendar years from the month of publication. In addition, S&P Global publishes the differential to FO 3.5% FOB Rotterdam Barge derivatives and crack values relative to Brent 1st Line Swaps for the same period.