NEWS ROUNDUP – 28 October 2019

Sulphur 2020 NEWS ROUNDUP – 28 October 2019


Lloyd’s Loading List – Carriers need to develop greener supply chains to meet IMO 2020 cost

James Baker | Monday, 28 October 2019

With the cost of compliance to new low-sulphur regulations set to top $10bn in the first year alone, box lines need to pass through the expense. But if presented correctly, they could use IMO 2020 to offer differentiated services More


Floating Storage for IMO 2020 Fuel builds in Asia – Marinelink

Stockpiles of low-sulphur marine fuels held in floating storage around the Singapore trading and pricing hub are steadily growing ahead of a 2020 global deadline for rules that have shaken the global oil refining and shipping industries.

A total of 32 ships, mostly supertankers capable of carrying 300,000 tonnes or more of oil, are currently anchored in Malaysian waters near Singapore accumulating stores of IMO-compliant fuels on board, according to data released by intelligence firm Kpler on 24 October. More

https://www.marinelink.com/news/floating-storage-imo-fuel-builds-asia-472148


SHIP & BUNKER – INTERVIEW: Glander International Bunkering Talks Bunker Traders & IMO2020

New Sulfur Cap to drive new ways of thinking on how we approach the buying and selling of fuels, Morten Langthjem tells Ship & Bunker.

https://shipandbunker.com/news/world/428273-interview-glander-international-bunkering-talks-bunker-traders-imo2020

SHIP & BUNKER – ExxonMobil IMO 2020 Talking Points 05: Teekay Tankers, Singapore [VIDEO]

ExxonMobil challenge Teekay Tankers to a game of French Boules to talk about the fast approaching IMO 2020 deadline.  https://shipandbunker.com/news/world/885590-exxonmobil-imo-2020-talking-points-05-teekay-tankers-singapore-video Watch video https://youtu.be/clPJMNNg8VE


Carriers need to develop greener supply chains to meet IMO 2020 cost

LLOYD’S LOADING LIST James Baker | Thursday, 24 October 2019

With the cost of compliance to new low-sulphur regulations set to top $10bn in the first year alone, box lines need to pass through the expense. But if presented correctly, they could use IMO 2020 to offer differentiated services https://www.lloydsloadinglist.com/freight-directory/news/Carriers-need-to-develop-greener-supply-chains-to-meet-IMO-2020-cost/75290.htm


SP & Platt – Term contracts for ex-wharf Singapore 0.5% marine fuel emerge as IMO 2020 nears

The Singapore bunker fuel market saw the first few term ex-wharf 0.5% marine fuel contracts inked recently as market participants continue to gear up for IMO 2020, which kicks off at the start of January 2020. SP & Platt subscription needed https://www.bunkerworld.com/news/155614


Onboard engineers face operational challenges post-2020

ShipInsight Paul Gunton · 23 October 2019

Many shipboard engineers have not received adequate training on handling sulphur-cap-compliant fuels, despite potentially having to deal with situations arising from stability and compatibility problems, believes a leading marine engineer who was involved in drafting MARPOL Annex VI.

Andy Wright, a fellow of the Institute of Marine Engineering, Science and Technology (IMarEST), told ShipInsight that the problems are not new, but “there’s a greater likelihood [of them occurring] than in the past” because “there is almost a surety of much greater variability than people have ever been used to in the past.” This variability will be particularly relevant, he said, “where you are pushed to take more fuel than you can store in a segregated manner.” https://shipinsight.com/articles/onboard-engineers-face-operational-challenges-post-2020


Chimbusco secures 4m tonnes of IMO 2020-compliant low sulphur fuel – Seatrade Article 23 Oct 2019

China’s state-owned bunker supplier Chimbusco revealed that it has secured at least 4m tonnes of very low sulphur fuel oil (VLSFO) and started initial supplies to all major Chinese ports from bonded storage, ahead of IMO 2020, reports said.

From 1 January 2020, all ocean-going ships will be required to burn bunker fuels with a maximum sulphur content of 0.5%, down from the current cap of 3.5%, under IMO’s Marpol Annev VI global regulation. https://www.seatrade-maritime.com/news/asia/chimbusco-secures-4m-tonnes-of-imo-2020-compliant-low-sulphur-fuel


Ship & Bunker 23 October 2019 – Compliant VLSFO fuel now available for Qatar

Compliant VLSFO fuel now available for Qatar LNG fleet and general shipping ahead of sulpur cap implementation https://shipandbunker.com/news/emea/504163-qatar-supplies-vlsfo-ahead-of-imo2020-switchover


BUNKERSPOT – EUROPE: VARO starts supply of VLSFO marine fuels in Bremerhaven in addition to port of Hamburg

VARO Energy has announced that it is expanding its supply of marine fuels to to Bremerhaven, in addition to the Port of Hamburg. https://www.bunkerspot.com/europe/49184-europe-varo-starts-supply-of-vlsfo-marine-fuels-in-bremerhaven-in-addition-to-port-of-hamburg


MARITIME CYPRUS – IMO 2020: Shipboard precautions concerning change-over to 0.50% sulphur compliant fuel

In order to comply with the new sulphur limit for fuel oil used on board ships taking effect from 1 January 2020, residual fuel oils with sulphur contents of 0.50% or lower (hereafter, referred to as “compliant fuel oils” in this booklet) will be distributed globally and loaded on board ships. Consequently, the number of occasions where fuels for main engines or auxiliary engines are changed from conventional fuel oils to compliant fuel oils and actually used will increase.

The Authors, having summarized the potential risks related to the changing over from conventional fuel oils to compliant fuel oils and the measures necessary to mitigate said risks, have decided to make this information available to the ship crew members who are actually responsible for such operations. https://maritimecyprus.com/2019/10/22/imo-2020-shipboard-precautions-concerning-change-over-to-0-50-sulphur-compliant-fuel/


LLOYD’S LIST – Total enters marine fuels venture with Zhejiang Energy

As global preparations for the biggest fuel switch the shipping sector has seen, Total and ZEG are joining forces to supply fuels to the Zhoushan region — including Shanghai and Ningbo. ZEG will control the majority of the new joint venture.

Lloyd’s List 21 October 2019 https://lloydslist.maritimeintelligence.informa.com/LL1129621/Total-enters-marine-fuels-venture-with-Zhejiang-Energy

subscription required.


Tight HSFO supply in Singapore raises arbitrage premiums over European values

Tight supply of high sulfur fuel oil in Singapore pushed premiums to a one-month high for derivative contracts measuring the arbitrage to Asia from Europe, amid rising freight rates and a shift toward low sulfur bunker fuels. https://www.bunkerworld.com/news/155590?tag=1-470280-28690183-0-BW

VPS launches new test for wax appearance temperature for VLSFOs

The new test will help address bunker fuel quality issues. https://www.bunkerworld.com/news/155589?tag=1-470280-28690183-0-BW

Both stories Subscription required S&P Platts


IMO 2020 presents challenges and opportunities for container shipping lines

Hong Kong Shipping Gazette article 23 October 2019

INDUSTRY experts have raised fresh concerns over the container shipping sector’s ability to recoup higher fuel costs that stem from the International Maritime Organization’s (IMO) new regulation that ships use maritime fuel with a sulphur content capped at 0.5 per cent, starting from January 1.

McKinsey partner Steve Saxon said there was “some good and some cautious news” for carriers in the period leading up to IMO 2020. “The good news is there will be sufficient supply of low-sulphur fuel oil (LSFO),” he told delegates at the TPM Asia conference held recently in Shenzhen, reported UK’s The Loadstar.

Full article here http://sulphur2020.online/blog/imo-2020-presents-challenges-and-opportunities-for-container-shipping-lines/

IMO 2020 presents challenges and opportunities for container shipping lines

Hong Kong Shipping Gazette article 23 October 2019 – reposted http://www.shippingazette.com/menu.asp?encode=eng 

INDUSTRY experts have raised fresh concerns over the container shipping sector’s ability to recoup higher fuel costs that stem from the International Maritime Organization’s (IMO) new regulation that ships use maritime fuel with a sulphur content capped at 0.5 per cent, starting from January 1.

McKinsey partner Steve Saxon said there was “some good and some cautious news” for carriers in the period leading up to IMO 2020. “The good news is there will be sufficient supply of low-sulphur fuel oil (LSFO),” he told delegates at the TPM Asia conference held recently in Shenzhen, reported UK’s The Loadstar.

“There will be some volatility in January, but very quickly this will come down to a moderate spread [the cost comparison with high-sulphur fuel].

“The caution I have is we’re less optimistic about the industry’s ability to push through the surcharges and BAFs [bunker adjustment factors] for the LSFO, and that’s because there are carriers with very different strategies and significantly lower cost bases,” Mr Saxon added.

For example, 2M alliance partners Maersk and Mediterranean Shipping Company (MSC) have taken a near-opposite approach, the former choosing to switch to LSFO and the latter investing heavily in scrubbers.

“With the oversupply, carriers with scrubbers may look at it as an opportunity to win market share,” Mr Saxon said.

HSBC’s global head of shipping and ports equity research Parash Jain pointed out that the fuel price was expected to increase to levels similar to those in 2011.

“So, it comes down to whether they can pass costs on, and that depends on supply and demand,” he said.

“Come 2020, if demand should fall off a cliff, then the inherent competition will kick in and, on the one hand, you have a surcharge to capture all the fuel increase, but then your base rate could come down to zero.”

IHS Market’s vice president Rahul Kapoor was more optimistic. “The container shipping industry has been subsidising its customers,” he noted. “IMO 2020 and mergers and acquisitions have played into the hands of carriers. Over the next few years, my view is that freight rates will be higher.

“Carriers have shown they can control weekly capacity better than before. We’re in a bad demand scenario and freight rates are still breaking even.”

Some 50 containership with a capacity of 22,000 TEU or above are slated to enter service within the coming three years, meaning the container shipping industry remains “very challenged”, according to McKinsey’s Mr Saxon.

“Carriers have got better at managing weekly capacity, with more voids, faster changing of services and more layups, but those ships still exist and that is latent supply which is going to hold back any significant increases in freight rates,” said Mr Saxon.

“There’s a lot of ships out there still in search of cargo and, with the lower demand growth we’re seeing now, together with new ship orders, it doesn’t make us terribly optimistic that the supply and demand balance is going to be favourable.”

 

Friday Round Up of News 18 October IMO 2020

A round up of what is in the maritime press this week on Sulphur 2020 and IMO 2020.

SP Platts – Demand for cleaner marine fuels in Singapore ramps up as IMO 2020 looms: MPA data

Sales of 180 CST low sulfur fuel oil in September jumped 70.7% from August to 71,500 mt. More here (subscription required)

Singapore 380 CST HSFO swap cracks slump to new lows as IMO 2020 nears

High cracks are not sustainable, so we are going into a more reasonable range as the market is less wild, a trader said. More here (subscription required)


Marine Insight logoGreat composite of news, guidance and help on Sulphur 2020

from Marine Insight here 


Ship Insight – a simplified BAF indexing mechanism

Shipping analyst Drewry and the European Shippers’ Council (ESC) have defined and published a simplified BAF indexing mechanism and bunker charge guide to help shippers monitor and control bunker charges as shipping lines switch to the more expensive bunkers required under the IMO 2020 low-sulphur regulation.

The mechanism is the result of the ESC-Drewry IMO toolkit reference group of ten experts that Drewry and the ESC tasked with gathering views and best practices on IMO 2020 low-sulphur fuel-related topics. More


Lloyd’s List –
Ships will be fined for non-compliance with IMO 2020

Those responsible for ships will be fined if found to be non-compliant with the International Maritime Organization’s low-sulphur rules which take effect on January 1, a fuels symposium at the IMO was told More (log in or subscription required)

Lukoil to produce IMO 2020-compliant LSFO

Russia’s decision to produce IMO-compliant fuel comes as differentials for its Urals crude have fallen to the widest discounts in a year against dated Brent crude. Russia’s high sulphur content crude could fall out of favour with European refiners as refining margins are eroded by reduced demand and weaker prices More (log in or subscription required)


Ship and Bunker key stories

Singapore and Malaysia’s stockpile of IMO 2020 grade fuel continues to grow – read more here

Bunker industry ready for IMO 2020 Eniemo IBIS director, declares during IMO2020 symposium more

Japan has agreed on a basic fuel spec for IMO 2020 compliant fuel and confirms its safe use during the IMO conference on 2020 this week. More

Are you really ready – 30 things to ask yourself? Checklist here

Taking a PASS on PAS (Publicly Available Specification)

Whilst it is understood why there is not enough time for a new ISO standard for 2020, it was hoped that PAS would fill in the gap. PAS hasn’t and what it has done is highlight major concerncs and issues without any solutions – read the full story here.

 

Great roundup and guidance from Marine Insight

Great roundup and guidance from Marine Insight

Marine Insight email news update on Sulphur 18 October 2019

IMO 2020 or Sulphur 2020 is a regulation that aims to cut sulphur oxide emissions from ships.

Sulphur is prominently found in crude oil, the main type of fuel oil used for ships.

Sulphur oxides, one of the products of crude oil combustion in Marine engines, is harmful to human health as it causes respiratory problems and lung disease.
SOx in the atmosphere also leads to acid rain, which is extremely harmful to the environment.

Thus, the new IMO regulation with the implementation date of 1st January 2020 will limit the sulphur content in fuel oil of ships.

 

Currently, the industry has been grappling with the challenges associated with the new Sulphur cap regulation.

According to a report, the Sulphur cap on marine fuel is expected to cost an estimate of about US$60 billion to the industry each year.

Considering the amount of confusion and worry surrounding the topic in the industry, we decided to create a list of useful resource which will help you to understand that regulation better.

IMO 2020 Resource:

 

Understanding the regulation

We have made an introductory video to help you understand the regulation better.

Watch: What is IMO 2020? 

 

Infographic: Benefits of IMO 2020 

 

Vessel Preparation and Implementation Guidelines

 

IMO 2020 – Sulphur 2020 Regulation 

 

How to cut Sulphur Dioxides, things to know:

 

What is sulphur oxides 

 

10 Methods to reduce SOx/NOx emissions from ships

 

Using LSFO to comply, things to know:

 

A guide to marine gas oil and LSFO

 

Fuel oil change over procedure for main and auxiliary engine

 

Using Scrubber System to comply. things to know:

 

Understanding various components of exhaust gas emissions from ships

 

A Guide to Scrubber system on ships

 

IMO has also come up with a great FAQ, which can be downloaded here.

 

If you have any questions regarding the regulation or want to start a discussion, head over to Marine Insight Forums.

Though it is expected that the initial phase of IMO 2020 may create a lot of challenges, the new regulation will be beneficial in the long run.

In the news – Sulphur 2020 Update 15 October

As it is only 78 days to the introduction of the IMO Sulphur 2020 Cap, it is not surprising that there is a lot in the news about the latest developments, trends and compliance. So we are going to be producing regular news updates featuring the key stories for you to look at.

The latest news and views from the shipping industry collated by Sulphur2020.online


European Shippers’ Council and Drewry announce IMO 2020 fuel-cost indexing mechanism

The guide aims to help shippers monitor and control bunker charges as shipping lines switch to the more expensive fuel required under the IMO 2020 low-sulphur regulation

By Will Waters Lloyds Loading List| Monday, 14 October 2019 Read the full story here


Gunvor to start producing IMO-compliant fuel oil mid-2020. Reuters by Julia Payne

LONDON (Reuters) – Gunvor Group [GGL.UL] will overhaul its refinery in Rotterdam in March next year and reconfigure the plant to produce some low sulfur fuel oil that complies with new, global shipping rules, its chief executive officer said. Read article here


From Bunkerspot – EUROPE: Gunvor’s ARA refinery network set to produce VLSFO in Q2 2020

Gunvor Group has confirmed to Bunkerspot that its Rotterdam and Amsterdam refineries will be ‘working in synergy’ to start producing the 0.50% very low sulphur fuel oil that meets the new IMO 2020 requirements from Q2 of 2020. Subscription needed. Read more


Splash 24/7 – India toys with giving domestic shipping a sulphur cap pass

The Hindu Business Line, one of India’s premier financial newspapers, is reporting New Delhi is contemplating not imposing the global sulphur cap – due to start in 117 days – for ships plying domestic waters.

A similar mooted move was floated by Indonesian authorities six weeks ago, before Jakarta stepped back into line with the global regulation. Read more


VPO – IMO sulphur 2020 and the role of advanced marine fuel management systems

Damian McCann, product manager for enginei EFMS, looks at how the IMO’s Sulphur 2020 regulations will put even greater importance on fuel management efficiencies.

As IMO Sulphur 2020 draws ever closer, the focus on vessel fuel implications grows ever stronger. In particular it is widely accepted that the costs of refining low sulphur fuel will inevitably increase fuel prices.

In turn, this is likely to put even more importance on fuel consumption and operating efficiency matters, reinforcing a marine sector trend in favour of effective electronic fuel management systems (EFMS) that has rapidly gathered pace in recent years. Read more


Lloyd’s List – Questions remain over carriers’ ability to pass on 2020 sulphur costs  by Cichen Shen

The climate agenda red tape that hits the global shipping industry in January 2020 poses enormous difficulties for liner shipping carriers. They need to work out whether they will be able to successfully pass on the higher fuel bill costs to shipper clients. The issue of rising costs will not only be decided by the spread between LSFO and HSFO and the methodology used in carriers’ BAF formulas. More importantly, the issue of costs will be greatly affected by the supply-and-demand picture next year amid a backdrop of rising economic and geopolitical uncertainties, a shipping conference is told.  Leading freight forwarder Kuehne + Nagel is extremely cautious about securing long-term contracts into 2020 against a backdrop of high volatility in fuel prices. Subscription needed more


Marine fuels supplier, Peninsula Petroleum Group (PPG) has renewed and increased its Asian receivables finance facility. By Tanker Operator

This takes the group’s bank liquidity to over $800 mill.

PPG’s Asian facility, led by HSBC in participation with United Overseas Bank, saw the total amount rise from $225 mill to $285 mill with both lenders increasing their respective ticket sizes and renewing the committed tranche of the facility by a further two years. This Asian facility follows the group’s recent renewal, increase and add new participants to its European receivables facility together with the addition of inventory finance solutions, the company said.  These increased lines enhance the diversity of Peninsula’s funding package beyond 2021, whilst further enabling the business to provide solutions to clients in the higher price environment expected, due to IMO2020, the company explained. More


IMO 2020 – 22% unable to comply – Palau Registry survey funnel – Seatrade Online

An IMO 2020 survey by Palau International Ship Registry (PISR) provides insight into the readiness of smaller owners for the sulphur cap with some 22% saying there is no way they can comply.

The survey conducted in recent months by the registry saw 337 responses in total and 219 from shipowners and managers. Of the shipowners and manager the majority 68% had small fleets of 1 to 7 vessels, 8.68% had 8 -10 vessels, and 22.37% of respondents a fleet of 10 or more vessels

https://www.seatrade-maritime.com/news/asia/imo-2020-22-unable-to-comply-palau-registry-survey/


HSFO Supply Post-IMO2020 Not an Issue: Survey – Ship and Bunker

Main bunkering ports to carry full range of bunker fuel from next January – Tradewinds Survey. Read in full here


2020 as 1984: almost a nightmare for shipowners by http://www.ship2shore.it/

At Intercargo’s semi-annual meetings in Athens, members say that the deadline dominates dry bulk shipping’s challenges. Subscription required more here