Platts proposes to change European fuel oil netback freight basket Jan. 3, 2023

Platts, part of S&P Global Commodity Insights, is proposing to change the freight baskets and freight rates used in the calculation of its Northwest European high sulfur fuel oil netback cargo assessment to exclude Russian loadports and take into account changing trade flows into Europe with effect from Jan. 3, 2023.

This is in light of an upcoming EU ban on Russian oil product imports from Feb. 5, 2023, and follows the decision by Platts to exclude Russian origin material in its HSFO assessments from Oct. 3, 2022: https://www.spglobal.com/commodityinsights/en/our-methodology/subscriber-notes/100322-platts-excludes-russian-origin-product-from-european-35s-fo-feedstocks-assessments

Observations of changing trade flows so far as well as market feedback have suggested that the HSFO CIF NWE cargo market will increasingly be served by the Amsterdam-Rotterdam-Antwerp region, Le Havre and Klaipeda.

The proposed changes and the affected assessments are as follows:

FO 3.5%S CIF NWE Cargo (PUABA00)

FO 3.5%S FOB NWE Cargo (PUABB00)

The freight basked used to calculate FOB NWE HSFO cargoes (basis Baltics) as a freight netback from CIF NWE HSFO cargoes (basis Rotterdam) would be as follows:

As a comparison, the 2022 average of Worldscale flat rates for the routes listed in the basket above would have calculated to $5.24/mt. The basket currently in use is based on the following routes: Ust-Luga, St. Petersburg, Tallinn and Vysotsk. It calculates to $7.95/mt and uses the dirty Baltic-UK Continent 30 kt Wsc (TDADY00) freight rate.

Platts will continue to monitor prevailing trade flows. Platts has also clarified that it may normalize bids, offers and trades reported in its Market on Close assessment process into ports other than the basis through daily review of prevailing flow.

Please send any feedback, questions or comments to europe_products@spglobal.com and pricegroup@spglobal.com by Nov. 4, 2022.

For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing.

Platts will consider all comments received and will make comments not marked as confidential available upon request.