Marine fuel 0.5%S in key Latin American ports this week reached their highest prices since end-April, when they fell to their lowest recorded values under the pressure of the low demand caused by falling oil prices and the coronavirus pandemic.
Ex-wharf 0.5%S, or VLSFO, was assessed June 8 in Balboa at $315/mt, its highest value since March 17, when it was priced at $310/mt, but still far from the $715/mt peak it touched at the beginning of the year. The Panamanian port crumbled to its lowest level of the year on April 28, hitting $182/mt.
“Everything is flying up in Balboa,” a market trader said June 8 as global oil prices started the week with strong gains. “The market is very reactive right now to any positive news.”
Santos, the Brazilian hub competing closely with Balboa in pricing, has followed a similar trend. VLSFO in Santos, where market sources say demand is stable , was valued June 8 at $307/mt, its highest level since $311/mt on March 17 and recovering from the lowest point of $187/mt it arrived at on April 28. The June 8 price was 54% lower than the $672/mt it reached in early January.
“In South America, other than Brazil, the rest of the markets are facing a very reduced demand,” a market source said. “Price increases, depending on the market, could be due to local costs in each country and the domestic circumstances related to COVID-19”.
In Argentina, 0.5%S rose to $340/mt on June 9, leaving behind the bottom level of $265/mt it reached also on April 28. Its highest point of the year, in the first week of January, was at $686/mt. Shipping traffic related to harvesting season has somewhat helped the recovery but demand is still low compared to the same period in previous years, market sources have said.
Another port where the fuel reached its lowest value around the same date is Cartagena, falling to $272/mt on May 1 from its highest point of $715/mt in January. The fuel rebounded to $353/mt on June 4, its highest level so far this month.
“Demand has increased a little bit,” a market participant in the Colombian market said, pointing to more activity for containers and bulk ships.
However, not all ports are experiencing the same level of recovery.
“One can see a widespread rise in prices, for example, in Panama. But that has not reflected in markets as Chile and Ecuador, where demand is very subdued,” a bunker source in Chile said.
Valparaiso, lagging behind the process followed in other ports, was assessed June 9 at $353/mt, 53% down from its top level of $750/mt in January 21 but above the $296/mt low touched on May 18.
A 0.5%S market in the Andean ports of Callao, Peru, and Guayaquil, Ecuador, started to develop months later than in the rest of the region. Platts started to assess these ports on April 20. Nevertheless, they still registered a sharp decline in May and they are now be on a recovery path from that bottom level.
VLSFO in Callao was assessed June 8 at $390/mt, its highest value since its weakest point of $285/mt on May 15. Its initial assessment in April was at $360/mt.
In Guayaquil, the fuel was assessed at $371/mt on June 9, also up from its bottom at $288/mt on May 13. The port was first assessed at $355/mt.
“Little by little, demand is gaining traction in Latin America but it is still far from pre-COVID levels,” the first market trader said.