Bunker prices in the Russian Baltic port of St Petersburg dropped to historical lows Tuesday because of increased competition from Rotterdam.
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With Brent crude futures dropping to multi-year lows during the week and pushing Rotterdam bunker prices lower, suppliers in St Petersburg were quick to respond with lower levels to preserve market share against Rotterdam.
Delivered St Petersburg marine gasoil dropped $14 to $335.50/mt Tuesday. Assessed at parity against Rotterdam, this was the lowest recorded level on St Petersburg MGO since Platts started assessing it on February 1, 2010.
"We face the risk of shipowners switching to Rotterdam with MGO prices now substantially lower there, which pressures us to lower premiums to retain competitiveness," a bunker supplier in St Petersburg said. "It works better for us to preserve our market share and continue fixing higher volumes, instead of hurting the fixing quantities to obtain higher margins."
Meanwhile, delivered St Petersburg 380 CST high sulfur fuel oil dropped $16 to a near 14-year low of $99.50/mt on lackluster demand. This was the lowest since March 19, 2002, when St Petersburg 380 CST HSFO stood at $98.50/mt.
Fixing activity on HSFO in St Petersburg had remained slow as the bearish crude complex made economics less favorable for shipowners, which made supply of the product abundant.
"Previously, when we had a discount of around $80/mt to Rotterdam on HSFO, shipowners used to send multiple vessels to bunker at St Petersburg.
However, with prices now lower in other ports, that practice is less profitable for shipowners, with the number of vessels calling to bunker being very limited," a supplier said.
Delivered Rotterdam 380 CST HSFO stood at $155.50/mt Tuesday, assessed at a premium of $56 to St Petersburg.
This was also the lowest Rotterdam price in almost 11 years, having traded at $154.50/mt on January 12, 2005.
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