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Taiwan CPC changes domestic low sulfur fuel oil price formula to mitigate basis risk

Taiwan's state-owned CPC has changed the price formula of low sulfur fuel oil it sells to certain domestic buyers, to mitigate some of the losses from the resale of imported LSFO, company sources said late last week. CPC will now price fuel oil it supplies to certain industrial and other buyers based on a combination of its own production cost and import cost, where the price basis will remain as the monthly average of Mean of Platts Singapore 180 CST high sulfur fuel assessments, a Taipei-based company source said.

The state-owned refiner used to price its LSFO supply to these buyers at the monthly average of MOPS 180 CST HSFO assessments in the previous month, a Singapore-based company source said Friday.

"This scenario of CPC selling fuel oil at a price lower than the cost means the company has been subsidizing the fuel in the long term. As an example, the value of LSFO subsidies last year was as much as NT$1.6 billion ($53.2 million), while that for the first seven months of this year has reached NT$1.1 billion," the company said in a statement early last week.

platts.com
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platts.com
Published on:
September 15, 2014
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