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Latam marine fuel 0.5% prices soar to 17-month highs, surpass pre-pandemic levels

Highlights

The peak comes after three consecutive weeks of gains

Strongest prompt-month Brent pricing seen since October 2018

Bunker fuel in Callao sees highest levels since April 2020

Marine fuel 0.5%S in key ports in Latin America rose higher into pre-COVID territory week ending Sept. 24, reaching heights not seen since end-January or early-February 2020, bolstered by robust crude prices.

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The 0.5%S, also known as very low sulfur fuel oil (VLSFO) was assessed Sept. 24 at $567/mt in Balboa on an ex-wharf basis. It was its strongest value since $575/mt on Feb. 3, 2020.

The peak was reached after three consecutive weeks of increases, with a steep 4.2%, or $23/mt, in the Sept. 20 to Sept. 24 period.

"Brent is rising like a rocket," a market source said of the crude futures market, which has supported values in Latin America.

ICE November Brent soared 5% to $78.13/b during Sept. 20-24, buoyed by tightened supply concerns and improving demand outlooks based on expectations of a decline in global COVID-19 cases. It was the strongest prompt-month Brent pricing since $79.82/b on Oct. 22, 2018.

In Santos, VLSFO ended Sept. 24 valued at $563/mt. The last previous peak reached by the fuel in the Brazilian port was on Jan. 29, 2020, when it was assessed at $576/mt.

Another port that witnessed a solid hike in VLSFO week ending Sept. 24 was Callao, Peru. The fuel was priced at $685/mt on Sept. 24, $35/mt or 5.4% above its value on Sept. 20.

No higher price has been seen for this bunker fuel in Callao. S&P Global Platts started to assess VLSFO in Peru only on April 2020, after the International Maritime Organization mandate for a maximum sulfur content of 0.5%S in bunkers was implemented on January 2020 and a market for it developed in the Peruvian port.

Other ports in the region reached pre-COVID heights.

In Valparaiso, VLSFO climbed $14/mt during the week and was valued Sept. 24 at $733/mt, its highest price since $735/mt on Jan. 23, 2020.

In Cartagena, it rose $17/mt and was assessed at $592/mt, a level only surpassed on Feb. 14, 2020, when it was priced at $600/mt.

A weaker advance was registered in Buenos Aires, where the price rose $8/mt Sept. 20-24 to $580/mt. A higher price of $585/mt was reached on July 6, 2021. But before this date, it was only on Feb. 3, 2020 when a firmer value was seen, at $590/mt.