Most of Japan’s shipping companies formally announced this week that they will be splitting their upcoming six-month term cycle into two separate cycles, due to price uncertainty driven by the mandatory adoption of mass flow meters at the port of Singapore come January 1, 2017, Japan-based traders said this week.

Japan’s major shipping companies such as NYK Line, Mitsui OSK Lines and K-Line, as well as others, typically have two six-month term cycles that run from April-September and October-March.

However, sources said majority of Japan’s shipping companies have decided that the upcoming October-March term will be split into an October-December cycle, and a January-March cycle.

“From what I understand, NYK has asked traders to submit term offers for the first three months, and they will begin negotiations for the next three months around December,” a Japan-based trader said Wednesday.

“For MOL, they have asked for 3+3, meaning they want offer prices for both October-December and January-March,” the trader said, adding however that he is doubtful MOL will agree to offer levels for the latter cycle.

“Price offers will be very high [for the January-March cycle] from the suppliers’ side because it is too risky … no one knows what the situation then will be like and all will want to be on the safe side, so they [suppliers] will just offer high prices, which I personally doubt MOL will accept,” he said, adding that MOL is probably merely curious for an idea of what prices for January-March may be like, and that they would likely take a similar approach to term discussions as NYK.

As of Thursday, it was heard that K-Line had yet to formally announce a decision on their approach for the October-March term, but traders said it is expected soon.

Officials from the three major Japanese shipping companies did not respond to requests for comment this week.

A source said Thursday that traders have around till the end of August to revert to Japanese shipowners as to their term offers.

Platts reported July 22 that the rare move to split the traditional six-month term contract into two stems from uncertainty from both Japanese shippers as well as suppliers about how bunker fuel prices in Singapore will be impacted from the mandatory adoption of mass flow meters.

Market participants said in July that some believe bunker fuel prices will be considerably higher once the mass flow meter mandate kicks in, which will then affect term differentials for Japanese companies’ bunker fuel contracts for volumes lifted from Singapore.

But others said there might be no change in term contract differentials at all if bunker fuel prices for Singapore reflected the rise.

“For now, our offer for a six-month term, or for a January-March [Singapore] term, will be higher,” a Japan-based trader said Thursday.

“We are still considering what offer prices to submit and discussing internally so we’re not sure if offer levels [for the October-December portion] will be similar to previous term cycles … it is very difficult,” the trader said.

The October 2015-March 2016 term cycle for bunker fuel supplied from Singapore was settled at a discount of around $5-$6/mt to the Singapore 380 CST delivered bunker fuel assessment. The current April-September term was heard to have been settled at around the same differentials. Traders said this split in the term contract would be temporary, with the Japanese buyers going back to the normal six-month term cycle once the initial uncertainty around Singapore bunker fuel prices settles down.

Sources also said that while Japanese shipping companies usually discuss six-month term contracts on a regional basis covering ports such as Singapore, Japan, South Korea, Hong Kong, China and others, only Singapore is being looked at for the change in term duration, with the other ports remaining on a six-month term contract. Sources estimate that on an average, the three major Japanese shipping companies — NYK Line, Mitsui OSK Lines and K-Line — lift a total of 300,000 mt of bunker fuel on a term basis per month from Singapore.