14 stories this week in our news round-up on sulphur 2020 and related stories, including can Blockchain help?
BIMCO September News Bulletin
Operators transitioning to low-sulphur fuels to meet the IMO Global Sulphur Cap have faced a sharp learning curve to overcome numerous technical issues. A recent Fuel Oil Quality and Safety Survey, conducted by BIMCO is featured in their September bulletin http://portfolio.cpl.co.uk/BIMCO/202009/sulphur-cap/
Gibraltar Hi-5 bunkers spread at fresh low amid tightness in HSFO
The premium of very low sulfur fuel oil to its high sulfur counterpart at Gibraltar has fallen to its lowest level since at least July 2019 — when S&P Global Platts began assessing VLSFO — amid contrasting supply and demand fundamentals, sources said.
“[There are] heavy issues with HSFO avails in the Gibraltar straits,” one bunker buyer said, adding that, in some cases, HSFO prices were above those for VLSFO.
VLSFO supply has been ample, meanwhile, amid the demand destruction caused by COVID-19. https://www.bunkerworld.com/news/insight/158038/Britt-Russell-Webster-Harry-Morton-Rowan-Staden-Coats-Sarah-Jane-Flaws/Gibraltar-Hi-5-bunkers-spread-at-fresh-low-amid-tightness-in-HSFO
Gard reflects on IMO 2020 fuel switchover
Predictions over potential engine damage and litigation between owners and charterers relating to the use of very low sulphur fuel oils have not materialised – but challenges remain, says the P&I Club.
This week Gard published a report on the IMO 2020 transition based on the claims and inquiries from its members and clients, as well questions posed during a series of webinars hosted by the Club which focused on upon technical, contractual, insurance and enforcement issues related to IMO 2020. https://www.bunkerspot.com/global/51310-global-gard-reflects-on-imo-2020-fuel-switchover
Trafigura invests in improving Berbera Oil Terminal, to make it a ‘regional supply hub’
Trafigura Group has delivered a first shipment of low sulphur gasoil to the Port of Berbera, following the signing of a milestone storage agreement earlier this year with the Government of Somaliland’s Ministry of Trade, Industry and Tourism.
This is the first step in a commitment by Trafigura to invest in Berbera Oil Terminal (BOT) facilities to position it as a gateway to serve customers within the country, and integrate oil logistics across the Horn of Africa. https://www.storageterminalsmag.com/trafigura-invests-in-improving-berbera-oil-terminal-to-make-it-a-regional-supply-hub/
ExxonMobil completes successful sea trial of its first marine bio fuel oil
ExxonMobil has safely completed a successful sea trial using the company’s first marine bio fuel oil with shipping company Stena Bulk, bunkered in the port of Rotterdam.
The marine bio fuel oil is a 0.50% sulphur residual-based fuel (VLSFO) processed with a second generation waste-based FAME component (ISCC certified). The product will be available later this year, initially in Rotterdam before a wider launch across the ExxonMobil port network. https://shipmanagementinternational.com/exxonmobil-completes-successful-sea-trial-of-its-first-marine-bio-fuel-oil/
Japan marine fuel 0.5%S flips to premium as typhoon delays bunkering
A temporary tightness in Japan’s marine fuel market due to the impact of Typhoon Haishen has pushed the marine fuel 0.5%S differential into positive territory for the first time in four months. https://www.bunkerworld.com/news/158050
Sediment levels in off-spec fuels cause concerns
The Fuel Oil Bunker Analysis Service is reporting a smaller share of off-specification fuels. It is also noting the increasing prevalence of sediments. Off-spec fuel shares in 0.5% fuels have declined in recent months. At the same time, cases of severe impact, such as vessel paralysis, have not been seen in the past couple of months, Lloyd’s Register testing agency the Fuel Oil Bunker Analysis Service reports. https://lloydslist.maritimeintelligence.informa.com/LL1133815/Sediment-levels-in-offspec-fuels-cause-concerns (subcription)
BIFA urges all box lines to drop low-sulphur fuel fee
The British International Freight Association (BIFA) has said recent announcements by some container shipping lines that they will suspend or discontinue low-sulphur fuel surcharges “will be welcome news” for its members, urging all box lines to drop low-sulphur fuel fees and criticising the creeping number of other surcharges and fees.
Vessels with scrubbers look like the biggest sulfur cap losers
Alphatanker says that tankers with a scrubber on board are the biggest losers in the wake of the new sulfur regulations. The analyst firm assesses that the payback period for a scrubber is now up to five years for a supertanker. https://shippingwatch.com/carriers/Tanker/article12397748.ece
US Refining Firms Take to Court Over Bunker Desulfurisation Patent
The technology involves using a hydroprocessing unit at a refinery to remove the sulfur from HSFO while preserving its other qualities. https://shipandbunker.com/news/am/582350-us-refining-firms-take-to-court-over-bunker-desulfurisation-patent
Mitsubishi 2020 Scrubber Installations Reach 22 Ships
The company has installed the systems on board five 20,000 TEU container ships, eight 14,000 TEU container ships, five container ships of 10,000 TEU or less, two oil tankers and two LPG carriers. https://shipandbunker.com/news/world/299208-mitsubishi-2020-scrubber-installations-reach-22-ships
US Refining Firms Take to Court Over Bunker Desulfurisation Patent
The technology involves using a hydroprocessing unit at a refinery to remove the sulfur from HSFO while preserving its other qualities. https://shipandbunker.com/news/am/582350-us-refining-firms-take-to-court-over-bunker-desulfurisation-patent
Patent-pending low sulphur fuel technology was copied, claim inventors
Rigby Refining executives are seeking a jury trial to determine if Phillips 66 and WRB Refining ‘copied’ their Magēmā low sulphur fuel technology.
A complaint has been filed in a Texas district court over the alleged use of the Magēmā technology which was developed by Rigby Refining CEO Michael Moor and Chief Technologist Bertrand Klussman. https://www.bunkerspot.com/americas/51269-americas-patent-pending-low-sulphur-fuel-technology-was-copied-claim-inventors
And this is why we created BunkerTrace. Developed in 2019, with input from a broad consortium via BLOC, BunkerTrace is a turn-key solution for tracking marine fuels. Its combination of blockchain and synthetic DNA provides shipping with the assurance of accurate reporting and authenticity of fuels for actionable insights and compliance.
After the first pilot with Cooperative Bebeka in 2019, and scaling with first mover clients, BunkerTrace successfully proved that this technology can transform marine fuel compliance and that the data can be used to make the bunkering supply chain safer. https://theloadstar.com/2020-compliance-and-bunker-fuel-issues-solved-using-blockchain-and-dna/
Maritime shippers focus on ‘clean’ vessels amid pandemic
Industry aims to reduce pollution, improve efficiency, strengthen asset class
“Finally, we project that average vessel speeds will slow to reduce fuel consumption. Such decreases in vessel speeds lead to supply contraction as vessels take longer to complete voyages, thereby supporting market rates.” https://www.theasset.com/article-esg/41549/maritime-shippers-focus-on-clean-vessels-amid-pandemic
Sulphur2020 News Round-Up 7 September 2020
10 featured news updates on Sulphur2020 including a Podcast and the fact that Containerships overtake tankers for the most fitted scrubbers details
Mitsubishi Shipbuilding’s marine sulphur oxides (SOx) scrubbers have been successfully installed on 22 ships across three ship types during the last 8 months.
The DIA-SOx scrubbers have been installed as scheduled despite COVID-19 restrictions. Remote commissioning conducted via close communication and cooperation with the engineers of its local partners in China and Singapore respectively enabled Mitsubishi Shipbuilding to continue with the planned installations. Read more https://vpoglobal.com/2020/09/04/mitsubishi-shipbuilding-completes-22-scrubber-retrofits/
Rotterdam Hi-5 bunker spread hits all-time low
The premium of very low sulfur fuel oil over its high sulfur equivalent at Rotterdam port fell to a record low on Aug. 21, as the latter stays resilient to bearish fundamentals in the global oil complex.
Read blog post here https://www.bunkerworld.com/news/insight/157893/Britt-Russell-Webster-James-Goldburn/Rotterdam-Hi-5-bunker-spread-hits-all-time-low
Shipper relief as ocean carriers finally scrap low-sulphur surcharges
Ocean carriers are officially scrapping the low-sulphur fuel surcharges introduced last year to mitigate the impact of the 1 January IMO 0.5% sulphur cap regulations on marine fuel.
Maintaining low-sulphur surcharges as fuel prices plunged has been a bone of contention for shippers, who have criticised carriers for being slow to ditch the additional fee. Read in full https://theloadstar.com/shipper-relief-as-ocean-carriers-finally-scrap-low-sulphur-surcharges/
Demand for HSFO at Singapore rising as more scrubbers fitted
Singapore has seen a rise in demand for high sulfur bunker fuel of late from the growing number of ships that have completed scrubber installations, given the limited availability of the grade at smaller ports, market sources said. More https://www.bunkerworld.com/news/157981
MARINE FUEL 0.5%S: Ample supply weighs on global marine fuel markets in September
Global marine fuel 0.5% prices are expected to be capped by increasing supply and depressed demand from the retail sector in September as refiners continue to grapple with weak low sulfur fuel oil margins.
Inventory levels in Asia in particular are expected to rise as an arbitrage window from the West that opened in early-August has market participants expecting at least a 500,000 mt increase in volumes landing in Singapore in September from the month before. Read the blog here https://www.bunkerworld.com/news/insight/157965/Rohan-Menon-Sarah-Jane-FlawsBeth-Brown/MARINE-FUEL-0-5-S-Ample-supply-weighs-on-global-marine-fuel-markets-in-September
South Korea tightens sulphur cap By Hwee Hwee Tan
The six ports affected by the new regulatory cap are Incheon, Pyeongtaek-Dangjin, Yeosu, Gwangyang, Busan and Ulsan. Vessels are required to switch to 0.1% sulphur fuel within an hour of anchoring or docking and do so until an hour before leaving. From January 1, 2022 ships must switch over on entering the emissions control areas Read here (subscription) https://lloydslist.maritimeintelligence.informa.com/LL1133720/South-Korea-tightens-sulphur-cap
Pricing for marine fuel 0.5%S in Balboa, Houston jumps on tight supply, wholesale values
Bullish crude complex also plays role in recent bunkers price increases. Read here https://www.bunkerworld.com/news/157960
Listen: Asian HSFO markets endure IMO 2020, coronavirus challenges
Featuring Mriganka Jaipuriyar Surabhi Sahu Oceana Zhou Commodity Oil, Shipping Length 12:12
Topic COVID 19: Coronavirus Outbreak, Environment and Sustainability, IMO 2020
Light sulfur fuel oil has been the main marine fuel of choice worldwide, but high sulfur fuel oil has held its stead in Asia. S&P Global Platts senior oil experts Surabhi Sahu and Oceana Zhou join Platts Asia Head of News Mriganka Jaipuriyar in examining the demand for HSFO particularly in Singapore, which is the world’s largest bunkering port. They also discuss China’s fuel demand and outlook, as well as the impact of the coronavirus pandemic on the Asian fuel oil markets. Link to listen https://www.bunkerworld.com/news/insight/157949/Surabhi-Sahu/Listen-Asian-HSFO-markets-endure-IMO-2020-coronavirus-challenges
Singapore LSFO-HSFO spread falls to 3-month low on rising LSFO supply
Bunker suppliers in Singapore reported fewer inquiries for low sulfur bunker fuel in the week ended Aug. 28. More here https://www.bunkerworld.com/news/157953
Containerships overtake crude oil tankers as most scrubber-fitted sector
Containerships with a collective cargo carrying capacity of 5.3m TEU are now fitted with an exhaust gas cleaning system (scrubber) to remove sulphur oxides (SOx) from the exhaust gasses generated by the combustion processes in marine engines and thereby comply with the IMO 2020 global sulphur regulation which came into force on 1 January 2020.
By the start of July, the share of the containership fleet with scrubbers installed exceeded that of the crude oil tanker fleet. At that time, the container shipping sector became the most scrubber-fitted amongst the main cargo carrying ship types. “In order to cut the sulphur oxides emission, shipowners who can afford to buy a scrubber have done so to a substantial extent, with investments predominantly directed towards high consumption ship types,” says Peter Sand, BIMCO’s Chief Shipping Analyst and continues – read more: https://www.bimco.org/news/market_analysis/2020/20200813containerships_overtake_crudeoil_tankers_scrubber
NEWS UPDATE 6 JULY – 4 Great stories to read
“Economies are picking up so the consumption is there,” said Malek Azizeh, commercial director of Fujairah Oil Terminal. https://www.bunkerworld.com/news/157422
Idemitsu Plant Raises VSLFO Output – Ship and Bunker
Demand for high sulfur fuel oil from Japanese ship operators remains small post IMO2020
South Korea declares local SECAs – Ship Insight and Dry Bulk
The Republic of Korea (South Korea) is the latest country to announce the designation of national sulfur emission control areas, which will enter into force on 1 September 2020.
The national South Korean sulfur restrictions will apply to the following six ports, and a national sulphur emission control area has been defined for each port
RPT-Marine fuel market facing tougher Q3 as supply rises
* VLSFO market weighed down by rising supplies, weak demand
* Global fuel oil supply to increase 620,000 bpd in Q3 -analyst
* Bunker demand to remain depressed in Q3
Hong Kong Shipping Gazette News hksg.com Read the full article below:
Cosco about to complete planned scrubber installations
CHINA’s Cosco Shipping Lines (Cosco) is about to complete scrubber installations, a plan that was announced in 2019.
Three vessels owned by China Shipping Container Lines (CSCL) before Cosco acquired the group as part of the government’s move to consolidate state-owned companies, CSCL Mercury, CSCL Jupiter and CSCL Saturn, 14,000 TEU sister container ships, arrived in the Liuheng yard of Cosco Shipping Heavy Industry (Zhoushan), on June 14, 2020.
The ships are the last of 10 vessels that Cosco earmarked in 2019 for scrubber retrofits, which usually take 15 to 30 days, depending on the size of the vessel, reports Container News, Jacksonville.
The scrubbers are provided by Finnish firm Valmet, which has four production units and three service centres in China. Scrubber-fitted ships can continue burning, cheaper, high-sulphur fuel oil and comply with the International Maritime Organization’s emission regulations that became effective this year.
The scrubber system delivery for Cosco Shipping Lines will include a tailor-made open-loop scrubber system for main engine and generator engines including auxiliary systems and automation.
In its 2019 financial report, the shipping line said that as at the end of the year, scrubber installations were completed on seven of the ships. The retrofitting schedules were planned according to the route and refuelling ports of the ships, as Zhoushan is a major bunkering port in China.
CHEM Europe: Development of sustainable marine fuels
In an EU-funded research project, an international consortium aims to develop new production methods for sustainable marine fuels to replace heavy fuel oils in shipping. The use of heavy fuel oils (HFOs) contributes to global warming due to the fossil origin of these fuels and, moreover, generating non-negligible emissions of pollutants such as sulphur oxides. The IDEALFUEL project aims to create sustainable alternatives by developing new efficient and low-cost methods to produce low-sulphur heavy fuel oils from wood-based non-food biomass. OWI Science for Fuels gGmbH and TEC4FUELS GmbH are involved in the project as research partners.
Hellenic Shipping News: Mounting transport fuel stocks add new twist to VLSFO specs
Shifting fundamentals in European transport fuel markets have affected operational requirements for shipowners using VLSFO, as blenders alter feedstocks to make their economics work amid the coronavirus pandemic while the bunkering industry grapples with this year’s lower sulfur content rules.
TheStar: Shippers face financial burden
KUALA LUMPUR: The delays in collecting cargoes during the movement control order (MCO) period has resulted in accumulated charges, causing financial burden to local shippers and manufacturers, says Malaysian National Shippers’ Council (MNSC) chairman Datuk Dr Andy Seo Kian Haw.
Splash 247: China launches low- sulphur fuel futures
China has started the trading of the futures of low-sulphur fuel on the Shanghai International Energy Exchange from today.
Prior to the commencement of official trading, the exchange conducted two trials on June 13 and June 21 including daily trading and settlement.
The first day of trading commenced with a benchmark price of RMB2,368 ($335) per ton for monthly delivery contracts from January to June 2021 and the price has so far surged by around 13 % on the Shanghai International Energy Exchange.
Indepthnews: Concerted Efforts to Offset Damage Caused by Arctic Shipping
REYKJAVIK (IDN) – The polar region located at the northernmost part of Earth is warming at an accelerating rate and as sea ice continues to melt away, Arctic waters are becoming increasingly navigable to vessels carrying heavy fuel oil (HFO). HFO, which is one of the world’s dirtiest fuels, is not only virtually impossible to clean up in the event of a spill, but also produces higher levels of air and climate pollutants than other marine fuels.
Aware of the severe risks that heavy fuel oil poses to polar environments, the international shipping community has already banned its use in the Antarctic. But, as experts point out, it is now time to provide similar protection to the Arctic – an ecosystem that is equally vulnerable to disturbance and pollution.
Until recently, 76 per cent of the fuel used in Arctic shipping was HFO. Ships typically used heavy fuel oil with a sulphur concentration of 2.7 per cent. But the International Maritime Organisation (IMO) has ruled that from January 1, 2020, the maximum sulphur content of ships’ fuel oil would be 0.5 per cent instead of 3.5 per cent. Subsequently, fewer ships are now using HFO.
VPO: Stena Bulk presents low emission tanker prototype
Stena Bulk has presented a prototype of the next-generation product and chemical tanker, the IMOFlexMAX, which will reportedly reduce greenhouse gas emissions by more than 25 per cent compared to current product tankers.
Ship and Bunker: Chinese VLSFO Exports dropped in May
Exports of very low sulphur fuel oil (VLSFO) from China dropped significantly last month according to news agency Reuters, in signs of a continuing impact of the Covid-19 pandemic on global shipping demand.
Ship and Bunker: OPEC+ Compliance May Deliver $500/MT VLSFO by End of 2021
Full compliance by members of the oil producer coalition OPEC+ to its output cuts deal could see Very Low Sulphur Fuel Oil (VLSFO) prices climb above $500/MT again by late 2021, according to bunker trading company Integr8 Fuels.
Ship and Bunker: Istanbul Market Faring Well Despite 8% Drop in Bunker Sales
Local bunker suppliers in Istanbul have sounded a positive tone despite a drop in marine fuel sales following measures put in place to address the COVID-19 pandemic.
Ship and Bunker: Pacific Green Retreats From Scrubber Sales as HSFO Discount Remains Narrow
Technology company Pacific Green has decided to scale back its presence in the marine scrubber business, in the latest sign of weakening prospects for the emission cleaning technology.
The installation of 700 scrubbers was cancelled due to Covid
According to Clarksons, many works entrusted to shipyards were cancelled due to the pandemic and to the drop in the price gap between traditional bunker oil and low-sulphur fuel oil
Fujairah refiners mull switch from LSFO to light distillates as profitability plunges – traders
Key low sulfur fuel oil refineries in Fujairah belonging to Uniper and Vitol may switch to producing more profitable light distillates or mothball their refineries altogether if demand for LSFO remains depressed and prices unprofitable, traders in Fujairah said week ending June 26.
Shippingwatch: Bunker company predicts significant price increase for low-sulfur oil in 2021
If the Opec+ member states continue to comply with their agreement to lower oil production, the price of low-sulfur fuel oil could surge to over USD 500 by the end of 2020, assesses bunker company.
Motorship: KEEPING ENGINES RUNNING AMID 2020 FUEL CHALLENGES
Early reports on the variable quality of very low-sulphur fuel oils confirm research highlighting the need for robust cylinder lubrication when using the new fuel blends.
Looking back on the first three month since the implementation of IMO’s global sulphur cap, it seems that concerns over the variability of new very low sulphur fuel oil (VLSFO) blends were justified. To cite just one example, Lloyd’s Register’s Fuel Oil Bunker Analysis and Advisory Service (FOBAS) has issued three alerts on excessive sediments in VLSFO. FOBAS’ analysis shows that five percent of all VLSFO samples taken in Singapore in the first two months of 2020 had high sediment volumes. In Rotterdam the figure rises to 23%.
Bunker price spread keeps scrubber economics unfavourable By Michelle Wiese Bockmann
The price spreads being seen have extended the payback period for a scrubber capesize bulk carrier beyond five years, and more than three years for a very large crude carrier
The difference in price between high-sulphur fuel oil and the compliant 0.5% sulphur fuel oil is weakening the economic argument for scrubbers.
Hong Kong Shipping Gazette News .hksg.com
Article in full below.
TS Lines in search of new ships as Q1 profits soar 170pc to US$21.5m
CHAIRMAN of TS Lines, Chen Te Shen says controlling costs and services additions on routes with growing demand have led to the Taiwan carrier’s 170 per cent year-on-year increase in profits.
The Taiwanese operator of the intra-Asia carrier reported profits of TWD650 million (US$21.49 million), achieved by responding to challenging conditions caused by Covid-19 with the company withdrawing from the US trades and concentrating on operating intra-Asian and Asia-Australia routes. Mr Chen said the company further reduced costs by redelivering chartered vessels that were deployed on withdrawn services.
The leased fleet increased the flexibility of the company’s operations. While owning a certain percentage of newly built own ships, with high fuel efficiency, allowed the company to reduce costs further, reports Container News, Jacksonville.
Mr Chen said that there is a silver lining in the pandemic, as oil prices collapsed to an 18-year low, resulting in low-sulphur fuel oil becoming cheaper. This meant compliance with the International Maritime Organization’s emissions cap was more affordable.
“Oil prices fell sharply in March. As the fuel surcharge was calculated based on the oil price of the previous quarter, when our actual bunker costs fell, the company’s profit increased,” explained Mr Chen.
Cargoes to and from India and the Philippines declined during Q2, but TS Lines added services to Thailand and Vietnam, where cargo demand remained strong. Consequently, the carrier’s operating profit for Q2 2020 is forecast to be TWD700 million.
The chairman said: “We’ll continue to acquire vessels and commission newbuildings. Three years ago, we aimed to own five vessels. At the time, we operated 36 vessels. Today, we are operating 46 ships, including 12 owned vessels. Another three are under construction. Today’s newbuildings are fuel-efficient, but it takes two years for a vessel to be built. If there are suitable pre-owned ships in the market, we’ll consider second-hand purchases.”
BTJ 2/20 – Green loans by the book. How to embed environmental care in ship financing by Amy Lindemann, Senior Associate, Campbell Johnston Clark
The IMO 0.5% sulphur cap is now in force globally, while the Poseidon Principles, a banking code aimed at integrating climate considerations into lending decisions, have been widely adopted by many of the major ship finance banks.
Let us then explore the implications for the evolution of loan and finance lease documentation in shipping, as well as for the commercial elements of deals.
ICE LSGO futures net speculative length rises 6,045 lots on week
Speculative net long positions in ICE low sulfur gasoil futures rose 6,045 contracts to 34,899 in the week to June 16, according to ICE data June 22.
Bunkerspot: AMERICAS: Panama’s May bunker volumes slip back 5% year-on-year
New Panama Maritime Authority statistics show that May bunker volumes totalled 393,316 metric tonnes, and the month was notable for a surge in low sulphur marine gasoil sales, which almost touched the combined total for the first four months of the year.
Bunkerspot: AMERICAS: New joint venture will look to process heavy crude oil using Quadrise MSAR technology
Oil exploration, development and technology group TomCo Energy and Valkor have formed a joint venture, Greenfield, which will look at the development of an oil sands plant at Asphalt Ridge in Utah; Valkor has also granted Greenfield a licence to Quadrise MSAR emulsion fuel technology for the processing of heavy sweet crude oil into IMO 2020-compliant heavy fuel oil.
Bunkerspot: GLOBAL: VLSFO: ‘load it and use it,’ says LR’s Douglas Raitt
Emerging problems over the stability of very low sulphur fuel oils (VLSFOs) when stored for longer time frames were addressed in an online webinar today hosted by Integr8 Fuels, with Douglas Raitt, Global FOBAS Manager, suggesting that the fuel may not be ‘a formulation to be kept for a period of time’.
The webinar, which looked at bunker fuel in the current shipping market, featured a wide-ranging discussion between Raitt and Chris Turner, Manager – Bunker Quality and Claims with Integr8 Fuels, and the quality of the new VLSFOs was, not surprisingly, a key talking point.
Bunkerspot: GLOBAL: Presence of shale oil in VLSFO blends is on the up
Since 1 January 2020, the use of shale oil in blended very low sulphur fuel oils has been on the rise, with significant levels of Estonian shale oil – which can cause issues such as onboard filter clogging – having recently been seen in bunkers supplied at ARA ports, according to Douglas Raitt, Global FOBAS Manager, Lloyd’s Register.
Bunkerspot: ASIA PACIFIC: Australia increasing fines for pollution related incidents
The majority of Australian States are increasing their fines for pollution related incidents with effect from 1 July.
Ship and Bunker: Bunker Futures Contract starts at Shanghai Exchange
The marine fuel futures contract that launches today on the Shanghai International Energy Exchange is likely to attract strong interest, despite weakened ship fuel demand amid the coronavirus pandemic.
Shipping Gazette: Pandemic forces shipowners to shelve scrubber installation
SHIPOWNERS are postponing or cancelling the installation of scrubbers that extract sulphur emissions from their vessels as the coronavirus pandemic tightens finances, reports Reuters.
Regulations from UN’s agency the International Maritime Organisation (IMO), which took effect in January, were viewed by the oil and shipping industries as one of the first worldwide efforts to enforce environmental change.
The rules aimed to make ships use fuel with a sulphur content of 0.5 per cent, compared with 3.5 per cent previously. Operators had the alternative option to install devices – scrubbers – to strip out the pollutant.
In the run-up to IMO 2020, dozens of traders and shipowners, bet on installing scrubbers hoping to make a profit from buying cheaper high-sulphur fuel as the newly developed 0.5 per cent alternative would be in tight supply.
But with an average cost of US$2 million to install just one, the stakes were already high for fleet operators often facing investments of more than $100 million.
Now the industry financial squeeze, caused by a decline in demand for shipping due to the Covid-19 crisis, may mean scrubbers become less of an option for ship owners to comply with regulations.
Leading Norwegian firm Wallenius Wilhemsen, which transports cars and other vehicles, told Reuters it had cancelled scrubbers for nine ships in the past few months and postponed an additional eight until later this year or 2021.”As a result primarily of the Covid-19 pandemic, customers have significantly reduced their output of vehicles,” a spokeswoman said. “With that comes a reduction in revenues and we are taking all necessary steps to reduce cash outflows.”
Clarksons Research said it recorded a significant slowing in the number of ships already in service installing scrubbers, estimating there were under 100 vessels undergoing retrofits versus over 300 at the start of the year.
Clarksons said the number of ships pending retrofits was 750 – some of which may be postponed or cancelled – versus a peak of over 2,000 pending in the middle of 2019. They estimated there were now 3,015 ships fitted with scrubbers, from 506 at the start of 2019.
Shipping Gazette: Cargo, low fuel bright spots in worst year for aviation: IATA
THE year 2020 will go down as the worst financial year in the history of aviation because of the Covid-19 crisis, a fact that justifies an industry-wide government bailout, according to the International Air Transport Association.
IATA’s director general and CEO Alexandre de Juniac, former CEO of Air France, saw only one ray of hope. “Strong cargo operations and comparatively low fuel prices will also give the industry a boost,” he said.
“But every day of this year will add US$230 million to industry losses. In total, that’s a loss of $84.3 billion. That’s why government financial relief is crucial,” he said.
“Provided there is not a second and more damaging wave of Covid-19, the worst of the collapse in traffic is likely behind us. A key to the recovery is universal implementation of the re-start measures agreed through the International Civil Aviation Organisation (ICAO) to keep passengers and crew safe,” he said.
“Airlines will still be financially fragile in 2021. Passenger revenues will be more than one-third smaller than in 2019. And airlines are expected to lose about $5 for every passenger carried. The cut in losses will come from re-opened borders leading to increased volumes of travellers.
“That will translate into strong incentives for travellers to take to the skies again. The challenge for 2022 will be turning reduced losses of 2021 into the profits that airlines will need to pay off their debts from this terrible crisis,” he said.
Reuters: China to be self-reliant in IMO-compliant fuel – official
Chinese refiners have the capacity to produce 18.1 million tonnes of low-sulphur fuel oil (LSFO) this year, which would make the country self-sufficient in the new shipping fuel, an official with state major PetroChina said on Monday.
Ship & Bunker: Petrobras low Sulfur Focus Fuels Exports’ Rise
Big monthly increase over a year ago.
Ship & Bunker: Singapore Bunker Margins Almost Double in a Week
The premium for delivered very low sulfur fuel oil in Singa
pore over local cargo prices jumped to $25.72/mt on Friday, from $13.98/mt a week earlier.
Ship & Bunker: Singapore Sees Marginal Decline in Bunker Demand in May
Total demand at the world’s largest bunkering hub fell to 3.925 million mt in May, down by 2% from a year earlier and by 4.6% from the previous month.
Bunkerworld: EIA says total US ULSD stocks draw for first time since March
Ultra low sulfur diesel stocks in the US drew for the first time since the week that ended March 27, falling 1.22 million barrels to 160.78 million barrels during the week that ended June 12, US Energy Information Administration data released June 17 showed.
Bunkerworld :TENDER DATA: India’s HPCL sells HSFO loading July 6-8 from Mumbai
HPCL is an occasional seller of high sulfur fuel on a spot tender basis, according to market sources.
Bunkerworld: S Korea marine fuel 0.5%S differential plunges to 10-month low on weak demand
Poor demand for delivered marine fuel 0.5%S in South Korea has pushed its differential against the FOB Singapore 10 ppm gasoil assessments to a 10-month low of minus $45.35/mt on June 17, S&P Global Platts data showed.
Bunkerworld: Bunker fuel trader Glander sees FY2019-20 revenues soar amid IMO 2020 transition
Glander International Bunkering reported a 19.4% rise in total revenue in its 2019-20 fiscal year amid an eventful year for the bunker industry, the marine fuel trader said in a statement June 18.
Bunkerworld: OIL FUTURES: Crude rises as OPEC+ compliance hopes overshadow virus risks
Crude futures settled higher June 19 as the market shrugged off concerns of a coronavirus pandemic resurgence amid tighter supply outlooks.
Bunkerworld: Bunker Fuels Need to be Treated Cautiously as Dangers for Engines Can Lurk in Low Sulphur Products
As the saying goes ‘There’s no such thing as a free lunch’, and that seems to be the case with the International Maritime Organization’s mandatory legislation on the sulphur content allowable in marine fuels, at least according to specialist fuel treatment firm Aderco.
Aderco has recently released a new fuel guide intended to improve fuel performance and prevent damage to maritime diesel engines. The report follows a series of tests conducted in Belgium and Singapore on low sulphur fuels over recent months. The authors claim that the tests show that incorporating a fuel additive can help mitigate problems such as commingling whilst improving fuel stability, reducing sludge and removing water from the new fuels.
Khaleej Times: Pandemic forces ship owners to shelve anti-pollution gear
Ship owners are postponing or cancelling the installation of “scrubbers” that extract harmful sulphur emissions from their vessels as the coronavirus pandemic tightens finances.
Regulations from United Nations agency the International Maritime Organization (IMO), which took effect in January, were viewed by the oil and shipping industries as one of the first worldwide efforts to enforce environmental change.
Khaleej Times: Three Steps for a Smooth Transition to IMO 2020: Preparation, Flexibility and Timing
During late 2019, the maritime industry was gearing up to IMO 2020. The logistical complexity and financial repercussions were going to be huge. While living and working through this step change, Hafnia Bunkers found that preparation, flexibility and timing were all essential for a smooth, efficient transition into this new reality.