Belgian tanker owner Euronav is facing a financial hit on its stockpile of low-sulphur fuel oil (LSFO) and gasoil stored on an ULCC off Malaysia.
The company said the unused IMO 2020-compliant bunkers will be subject to a mark to market valuation at the end of the first quarter and will lead to a write-down.
This is because the "current market is significantly below the acquisition cost", it added.
The purchase of the fuel provided protection for Euronav in the fourth quarter of last year, and the first quarter of this year, during a period of very high spreads between LSFO and high-sulphur fuel oil (HSFO), it said.
Euronav is currently using cheaper feedstock after buying LSFO in the open market.
It did not reveal how much oil is still on board but will provide more financial details with its first quarter results in May.
The company had acquired 420,000 tonnes of LSFO and marine gasoil (MGO) for storage on its 441,561-dwt ULCC Oceania (built 2003) in 2019.
The 295,000 tonnes of LSFO were acquired at $448 per tonne, only $47 above the price for heavy fuel oil, while the MGO was bought at $592.
Cleaves Securities said in December that the cargo's value had risen $52m.
But HSFO prices on a global basis have been falling, by $23 per tonne to $200, while LSFO fell $50 to $275 in recent days.
Spreads have been below $100 this month, and currently stand at $75 per tonne, the lowest level seen since at least 2017, Clarksons Platou said.
All for us
Euronav chief executive Hugo de Stoop was asked by analysts in February, with spreads riding high, whether some of the oil could be sold off to third parties.
But he said the company was not in the mood to share its compliant bunker stockpile with other owners.
"The fuel is just for us. Sorry guys, we're very selfish," he said.
He added: "The fuel on Oceania is tested. We are good to go for Q1 and Q2 and probably a little bit into Q3."
De Stoop also said that given market volatility it was not possible to sum up the effects of its fuel-storage hedge in the first quarter.
"We bought at a very attractive price for Oceania, and it's even more attractive now, but you can only compare prices to the average," he added.
