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Weakening energy sectors negatively impact Latin American bunker markets

Houston — Sustained weakening in the global energy markets this week has impacted key Latin American marine fuel prices in varying degrees.

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Sources this week indicated there was little impact being seen from falling crude prices on a day-to-day basis for marine fuel sectors, with some refiners sticking to their long-held practice of weekly price adjustments.

One exception has been Brazil, a trader source said Wednesday, adding that pricing posted by the government-owned refineries showed steep day-on-day declines for IFO 380.

August, so far, has seen both crude and high-sulfur fuel oil markets trend lower in four of the five sessions, losing 13.7%-28.5% between July 31 and Wednesday, according to S&P Global Platts data.

For the forward-month ICE Brent assessment, Wednesday's price of $56.24/b represents a low not seen since January 3 when the marker tumbled to $55.96/b, according to Platts data.

Likewise, the USGC HSFO waterborne assessment closed Wednesday at $42.93/b, its lowest point in more than two years dating to a close of $42.35/b on July 10, 2017, Platts data showed.

The Brazilian price for IFO 380, meanwhile, has fallen $98/mt (21%) so far this month, with the national refiner's posted prices declining in four of the five sessions during that time.

The delivered-Santos assessment fell to $369/mt, its lowest point since January 15, Platts data showed.

Other markets along South America's Pacific Coast were slower to react to bearish crude and HSFO trends, sources said. Refiners from Chile to Ecuador were heard holding steady on IFO 380 pricing, while issuing adjustments late in the week, as has been the customary practice.

Similar feedback emerged Wednesday from Uruguay, with a regional trader saying they weren't offering volumes until Thursday at the earliest as they awaited direction from the local refiner.

The Chilean price for IFO 380 has fallen just $13/mt (2.4%) this month, settling at $536/mt delivered Valparaiso on smaller reductions from the local supplier.

Likewise, the spot IFO 380 prices in Uruguay and Ecuador have shown less pronounced declines, at least when compared with Brazil and when considering upstream energy movements. A key factor has been the practice of state-owned refineries in both countries, sources have said, adding that price adjustments usually come late in the week.

The Uruguay price for IFO 380 closed Wednesday at $529/mt delivered Montevideo, down $19 (3.5%) from the end of July. A regional trader said Wednesday they were not seeing price changes as they await direction from the local refinery on Thursday. Though the market expected bunkers prices to fall at that time, the trader said, lower offers could also be seen next week instead.

Similar sentiment was heard Wednesday from Ecuador, with a local supplier saying they were not offering spot indications at the moment and were instead waiting for lower prices on Thursday. Pricing on a delivered-Guayaquil basis has held relatively stable in recent days as sources talk it in the $430s/mt.

--Phillipe Craig, phillipe.craig@spglobal.com

--Edited by Pankti Mehta, pankti.mehta1@spglobal.com