Bunker costs currently sit at around 40% of total Capesize freight rates. From an owners’ perspective, when hedging price risk, the need is to cover any exposure to an upside move in bunker rates.
Since June 20th 2014, the Sing 380 October contract has decreased in value from $615/mt to $450/mt, or in real cash terms, $603,900 on a 165,000dwt Capesize Qingadao-Tubarao-Qingdao round voyage.
With risk looking increasingly to the upside, and with market weakness priced in, is it time for owners to lock-in forward prices for bunkers and take advantage of lower fuel oil prices?
Read the full report in the attached PDF: FIS – Is it time to lock in bunker rates.