Contaminated fuel bunkered in Singapore is causing headaches for shipowners and charterers in the capesize and newcastlemax market, with the Brazilian market expected to be affected next quarter. Marine fuel testing company Veritas Petroleum Services (VPS) has identified 60 vessels that bunkered high-sulphur fuel oil (HSFO) contaminated with chlorinated hydrocarbons at the port of Singapore between mid-February and mid-March. Affected vessels are said to have suffered engine blackouts and other problems. Some vessels have had to turn back to Singapore, stop or head to the nearest port to debunker.

Several capesizes have been said to have been taken off the list of open tonnage in the Pacific while they deal with fuel-related problems, but market sources have struggled to quantify exactly how many. Several vessels had been contracted to Vale and were ballasting to Brazil when they encountered engine problems, which will have consequences for the Brazilian miner later this year. A source at Vale confirmed that the miner has had several vessels affected by the contamination. “At the moment we have long waiting times at load ports, so the impact to us will actually be a positive one in the immediate term, however, there may be a knock-on effect in Q3 as a result of the delays,” the source said. “Typically, the vessels that were contracted to us have been put back by 10-30 days.”

VPS on Monday said that 14 vessels across all sectors have reported “serious” damaging effects from contaminated fuel and warned that the off-spec fuel could continue to be a problem. “We would advise our customers to be very aware that this contaminated fuel remains in the supply chain and could potentially be reused or re-blended for use as a bunker fuel,” Malcolm Cooper said on Monday. The Singapore contamination has affected 140,170 tonnes of HSFO bunker fuel, which Veritas Petroleum Services called a “significant” quantity. Around 60 vessels are so far thought to have been affected. The fuel was contaminated by chlorinated hydrocarbons, which are hard to detect in sample testing using standard methods. These contaminants cause higher production of sludge in fuel lines and pumps, which can immobilize engines. These HSFO deliveries were made from two suppliers and 12 delivery barges, VPS added. Press reports have named the two suppliers as Glencore and PetroChina.

Now questions are turning to whether this incident is as serious — and potentially litigious — as the fuel contamination in the US in 2018. Marine fuel tracking firm FuelTrust thinks that insurance claims for the Singapore incident could “easily” run in the hundreds of millions of dollars, given the additional disruption to cargo deliveries. “We are seeing another fuel crisis similar to Houston in 2018,” said Jonathan Arneault, co-founder of FuelTrust. “Four years later, the lawsuits from Houston are still ongoing, and we’re just realizing the financial impact that a single batch of bad fuel can have on the industry. This recent incident is shining a light on a persistent global issue. Fuel quality problems cause de-bunkering issues every month in ports around the world, most of which never make the news.”

Ulf Bergman, senior economist at shipping data platform ShipFix, said there has been a definite drop in advertised vessel openings for the broader capesize segment in the Pacific. “While not historically low, the tonnage supply on offer is in the lower end of what we have seen in the last 24 months,” he told TradeWinds. “Globally, vessel openings for capes are also down but not to the same extent, suggesting that there may be a regional angle. “Likewise, vessel openings among larger capesizes have been trending lower in recent weeks. However, here the number of vessels is somewhat more limited, and the low numbers are not that unusual, so should be treated with some caution.” Arrow Research told TradeWinds it was aware of five or six capesizes affected by the contaminated fuel and said the number may be higher — but still not enough to have any noticeable market impact. Braemar ACM Shipbroking’s research team have also struggled to quantify the number of affected vessels. “While some vessels have been temporarily removed from the open tonnage list, this has not had a major effect, given the capesize market is in oversupply right now,” said Mark Nugent, senior freight, and commodities analyst at the shipbroker. “In tighter market conditions, such as in Q3 last year, we would have likely seen a stronger reaction to an event of this nature.”