American Natural Soda Ash Corp (Ansac), a soda ash exporter
based in the United States, is implementing a surcharge on
shipping fuel which will be put into effect immediately,
according to a company statement.
The move is a reaction to an impending regulation
from the International Maritime Organization (IMO), a United
Nations body, which will push ship operators toward using fuel
with lower sulfur content.
While this has not yet affected the price of
US-origin soda ash, it could influence the buying strategy of
consumers and subsequently exert price pressure in the
Southeast Asia is a strong market for US exports,
with Malaysia, Indonesia, Thailand, Indonesia, Vietnam, Japan,
India and the Republic of Korea all among the top 10 consumers
of US-origin natural ash, according to available data from the
US Geological Survey covering the period until June this
These markets would feel the strongest effect of a
per-tonne fuel charge, given the distances between those
countries and US ports.
South and Central American countries are also
major recipients of US-origin product.
The Platts Singapore 0.5% monthly average index
for August was $493 per tonne, which equated to a surcharge of
$3.30 per tonne for October shipments, according to Ansac
president Chris Douville.
Ansac will export around 4.4 million tonnes of
soda ash this year, making it the largest global export of the
material, the statement said. Fastmarkets estimates this volume
to be about 7% of the global market.
If the surcharge were to stay at its current level
and be placed on a full-year’s worth of exports,
it would cost Ansac’s customers $14.25
"Normally, we would use different financial
instruments to hedge our fuel exposure, but the speculative
premiums associated with those hedging instruments that are
currently available are far too expensive," Douville told
"Although demand has slightly reduced in some
markets due to economic conditions and consumers’
confidence, Ansac projects that the fourth quarter shipments
will be the largest of any quarter in 2019," he added.
The price for soda ash, natural, dense, large
contracts, fob Wyoming, was assessed at $185-225 per tonne on
August 29, unchanged month on month since February this year.
But Western sellers were bullish about a price increase later
this year, with the market getting toward the time for annual
The IMO regulation, to be enforced from January 1,
2020, was devised to restrict the use of high-sulfur fuel, 3.5%
content. From that date, ships may only burn that fuel when on
the open seas, and not in or around port areas.
This has placed a premium on low-sulfur fuel, 0.5%
content. It has also created backlogs of orders at dockyards
with ship owners scrambling to fit 'scrubbers’
which will allow high-sulfur fuel to be burnt at all times by
treating the waste fumes.
The Ansac statement did not detail the dollar
value of the surcharge, only that the Platts Marine Fuel Bunker
0.5% price surpasses a "certain US dollar threshold per metric
ton" and that it will apply to every vessel, effective
immediately. The statement was dated September 16.
"The highly speculative premium on forward pricing
for 0.5% low sulfur fuel versus today’s 3.5%
[fuel], as well as uncertainty as to the actions that
shipowners will take both before and after January 1, have
significantly limited the plausible fuel-hedging options
available in calendar year 2020," Douville said. "Therefore, to
ensure shipment reliability, Ansac has no choice but to adopt
this fuel surcharge program."