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.
22 Industry insights into bunkering and rates, interestingly not everyone agrees to how rates will fair over the coming months.
US Bunker Demand Drop “as Much as 30%” Globally, both larger ports and larger players fairing better than their smaller counterparts, says IBIA. Ship & Bunker read in full https://shipandbunker.com/news/world/698867-us-bunker-demand-drop-as-much-as-30
Integr8 Notes Bunker Prices Declining Relative to Other Refined Products. While spreads between products may be heading back towards previous levels, the bunker market should not expect outright prices to do the same yet, according to Integr8. Ship & Bunker read in full https://shipandbunker.com/news/world/921684-integr8-notes-bunker-prices-declining-relative-to-other-refined-products
Oil Up On OPEC Hopes As Virus Declines and Demand Builds Dominate The Business Landscape. Russia even suggests a crude shortage could occur next month. Ship & Bunker read in full https://shipandbunker.com/news/world/282194-oil-up-on-opec-hopes-as-virus-declines-and-demand-builds-dominate-the-business-landscape
High MGO bunker prices at Colombo pushes demand to Indian ports. “We are still receiving steady interest for MGO because of the lower prices in Mumbai,” said a bunker supplier in Mumbai. In Full https://www.bunkerworld.com/news/157194
Singapore gasoil/LSFO spread slides from 6-month high on returning marine fuel demand. The Singapore low sulfur swaps market has been gaining strength recently after a pretty quiet May when demand was muted, a trader said. https://www.bunkerworld.com/news/157193
Oil edges higher, but remains under pressure from OPEC+ uncertainty. Stepped-up stimulus efforts further supported demand outlooks, placing a floor under oil prices. In Full https://www.bunkerworld.com/news/157204
HES Wilhelmshaven Tank Terminal starts up LSFO unit. HES Wilhelmshaven Tank Terminal (HWTT), Germany’s largest independent liquid bulk terminal, has started up its low sulphur fuel oil (LSFO) production unit, with a capacity of 2.5m t/y. https://www.tankstoragemag.com/2020/06/04/hes-wilhelmshaven-tank-terminal-starts-up-lsfo-unit/
Thailand bunker supply tightens on run cuts, rise in domestic demand: sources. Bunker fuel supply in Thailand has tightened since refiners are cutting run rates, while domestic bunker demand is rising amid easing lockdowns, market sources said on June 3. In Full https://www.bunkerworld.com/news/157191
Bunkering body eyes spread of bunker licensing systems at hubs. Advocates of the system say it provides a more consistent standard of service. S & P Platts Blog post here https://www.bunkerworld.com/news/insight/157177/Tom-Washington/Bunkering-body-eyes-spread-of-bunker-licensing-systems-at-hubs
Crude prices creep higher on OPEC+ extension optimism. Russia has indicated it supports at least extending the reductions by one month through July. In Full https://www.bunkerworld.com/news/157180
Jiujiang Petrochemical joins Sinopec’s foray into producing 0.5% sulfur fuels in China. Domestic refiners continue to ramp up supply, lower China’s dependency on imported bunkers. https://www.bunkerworld.com/news/157168
Singapore’s LSFO-HSFO spread narrows to 1-month low amid tepid demand. More competitive bunker prices at other Asian ports remains key factor. More here https://www.bunkerworld.com/news/157170
Record Monthly Gains For Crude As Demand Continues To Grow Worldwide. But analysts warn that demand recovery will still be long and painful. Read in full https://shipandbunker.com/news/world/520565-record-monthly-gains-for-crude-as-demand-continues-to-grow-worldwide
Indian Bunker Suppliers Lower Prices to Take On Sri Lanka. Over the past two weeks the discount for very low sulfur fuel oil at Mumbai to Colombo’s levels has widened by $21/mt, reaching $42/mt on Thursday, according to Ship & Bunker pricing. Ship & Bunker read in full https://shipandbunker.com/news/apac/873041-indian-bunker-suppliers-lower-prices-to-take-on-sri-lanka
Less Advance Warning Needed for Spot Bunker Sales as VLSFO Availability Improves. Integr8 is now allowing a lead time of around 8.5 days on average for VLSFO stems, down from 10 days at the start of the year but still much higher than the 5-6 days needed for high sulfur fuel oil (HSFO) in the past. Ship & Bunker read in full https://shipandbunker.com/news/world/541406-less-advance-warning-needed-for-spot-bunker-sales-as-vlsfo-availability-improves-integr8
Bunkerspot: EUROPE: HES Wilhelmshaven begins LSFO production
HES Wilhelmshaven Tank Terminal in Germany has begun the operation of its low sulphur fuel oil production unit, which has a nameplate capacity of around 2.5 million tons per year.
Fathom.world: NAMEPA launches maritime sustainability passport Award: Cargill gets first
On the occasion of World Oceans Day, NAMEPA (North American Marine Environment Protection Association) has launched the first known comprehensive CSR/ESG (Corporate Social Responsibility/Environment, Social, Governance) program designed expressly for the maritime industry, with its corresponding “Maritime Sustainability Passport” (MSP) awarded to companies, organizations and individuals who meet the requirements of the platform. The program encompasses the three pillars of CSR/ESG: corporate governance, environment and the human element. The launch was designed to coincide with World Oceans Day.
Fathom.world: “Realizing Zero-emission Waterborne Transport to the benefit of future generations”
A partnership comprising key players within the European waterborne transport sector, working together within the Waterborne Technology Platform 1 , propose a new Research and Innovation Partnership which over a period of seven years will implement R&I which will by 2030 demonstrate the feasibility of zero-emission waterborne transport applicable for all main services and ship types.
Fathom.world: Aker BP and Yxney Maritime to chase offshore emission cuts
Press Release: Maress will enable Aker BP to get a detailed insight into the fuel consumption and emissions from the fleet of advanced offshore vessels operating on the Norwegian Shelf. The Maress software provides a foundation for making informed and data-driven decisions on how to decarbonize operations.
VPO: LUKOIL’s ECA-compliant cylinder oil retains approval from major OEMs
LUKOIL’s NAVIGO MCL Ultra remains one of few low BN cylinder oils that still have a valid ‘No Objection Letter (NOL)’ with all major OEMs.
Recently a leading OEM withdrew their approvals for almost all low BN oils in the market, while NAVIGO MCL Ultra has retained its status, and continues to be fully approved by all other major OEMs.
Bunkerspot: GLOBAL: Total signs up to the Getting to Zero Coalition
‘As a major energy player, Total is already developing cleaner fuels for the maritime industry – we share the ambition to get to net-zero emissions by 2050, together with society, for our global operations,’ says Patrick Pouyanné, President and CEO of Total.
The Getting to Zero Coalition is aiming, through its members, at getting commercially viable deep-sea zero-emission vessels powered by zero-emission fuels into operation by 2030.
Total said that it would contribute to the Coalition’s focus areas, including fuels, marine lubricants, and ship zero-emission technologies.
Ship & Bunker: Container Line CMA GCM Continues to Waive Low Sulphur Surcharge
French container line CMA GCM will continue to waive its low Sulphur surcharge designed to pass on the higher fuel costs for very low Sulphur fuel oil (VLSFO) to its customers, the company said Wednesday.
Bunkerspot: GLOBAL: The Bunkerspot Debate – 2020: expectations, realities – and black swans
The first online free-to-access Bunkerspot Debate is today available to view. In this discussion, four leading maritime lawyers – Beth Bradley of Hill Dickinson, Harald Søndergaard of Hafnia Law Firm, Andrew Preston of Preston Turnbull and Steve Simms of Simms Showers – give their expert insights on IMO 2020, bunker claims, sanctions, force majeure, and the impact of COVID-19 on the marine fuel and shipping industries.
The online Bunkerspot Legal Debate is the first in a series of focused debates which will look at key trends and developments in the marine fuel sector from an operational, commercial and technical point of view.
Bunkerspot: EUROPE: EC publishes first annual report on shipping’s CO2 emissions
During the first reporting year of 2018, 11,600 ships submitted fuel consumption data and were responsible for 138 million tonnes of CO2 emissions in the European Economic Area – with containerships proving to be the largest emitters, accounting for 18% of the monitored fleet and 30% of total CO2 emissions.
Bunkerspot: EUROPE: Danish companies team up to develop sustainable fuels for road, maritime and air transport in Copenhagen area
A.P. Moller – Maersk, Copenhagen Airports, DSV Panalpina, DFDS, SAS and Ørsted have joined forces to develop an ‘industrial-scale’ facility to produce sustainable fuels for road, maritime and air transport in the Copenhagen area.
In a statement issued today (26 May), the companies said that the hydrogen and e-fuel production facility could be ready ‘as soon as 2023’ and when ‘fully scaled-up by 2030’, it could ‘deliver more than 250,000 tonnes of sustainable fuel for buses, trucks, maritime vessels, and airplanes every year’.
Bunkerspot: GLOBAL: Wärtsilä upgrades FuelFlex ICU to deal with low sulphur fuels
Wärtsilä has launched a FuelFlex Injection Control Unit (ICU) upgrading solution to meet the requirements of operating its RT-flex type two-stroke diesel engines with both residual and low-viscosity marine fuels.
In a statement issued yesterday (245 May), Wärtsilä said that the upgrade was ‘particularly relevant in view of the industry’s increasing use of low-sulphur-content fuels in order to be compliant with sulphur emission regulations’.
Bunkerspot: GLOBAL: ExxonMobil introduces next-generation multi-fuel marine cylinder oil, Mobilgard 540 X
Mobilgard 540 X, which has been formulated for use with 0.10% and 0.50% sulphur fuels – and LNG – will be available at global ports from June this year.
Announcing the launch of Mobilgard 540 X, ExxonMobil said its low base number (BN) formulation had passed stringent fit-for-use testing in newer engine designs. The product is also the first cylinder oil to be gas-validated by WinGD.
Bunkerspot: GLOBAL: Gazpromneft Q1 revenues down, but refining volumes up
Russia’s Gazpromnneft reported revenues of RUB515 billion for the first quarter (Q1) of 2020, down from RUB614 billion last year, but its refining volumes were up more than 3% to 10.3 million tonnes – and this included increased production of IMO 2020-compliant very low sulphur fuel oil (VLSFO).
Bunkerspot: EUROPE: Portsmouth International Port to pilot smart energy system
Portsmouth International Port is part of a Port Energy Systems Optimisation (PESO) project, co-funded by Innovate UK, which is intended to reduce carbon emissions and facilitate the electrification of port operations.
Bunkerspot: ASIA PACIFIC: Shanghai exchange to test LSFO futures trading
The Shanghai International Energy Exchange is to undertake a ‘mock test’ of Low Sulphur Fuel Oil futures trading between 1-12 June.
Bunkerspot: EUROPE: Norway proposes funding for ‘green recovery’ initiatives
The Norwegian government has outlined proposals for a NOK 3.6 billion strategy to cut industry GHG emissions, which could encompass battery technology, hydrogen and green shipping projects.
VPO: British Ports Association calls for boost in shore power to decarbonise shipping
The British Ports Association has issued a new report, “Reducing Emissions from Shipping in Ports: Examining the Barriers to Shore Power,” calling for the UK government to boost its support for shore power connections as a viable tool for meeting its net zero carbon emissions targets.
The report suggests that this cannot be done without public investment. The Association urges a zero-emission berth standard that would help create more certainty around investments in emissions reductions technologies.
VPO: Lubrizol joins the Getting to Zero Coalition
The Lubrizol Corporation has become the first lubricant additive technology supplier to join the Getting to Zero Coalition.
The Getting to Zero Coalition is an international group currently endorsed by 14 governments and composed of more than 100 organisations. It aims to drive the development of commercially viable, zero-emissions deep-sea ships by 2030. This partnership between the Global Maritime Forum, the World Economic Forum and Friends of Ocean Action boasts leading shipowners, ports, technology providers and fuel companies as well as academic and research institutions.
VPO: Finnlines continues EUR 500M green vessel programme
Finnish ship operator Finnlines is investing EUR 500 million to deploy ultra-green vessels as part of the company’s strategy to reduce fuel consumption and harmful emissions.
The new ro-ro vessels will be built with the latest technology available to ensure the lowest CO2 emissions. They will be equipped with lithium-ion battery systems that enable zero-emission operations in port. The first ro-ro vessel is expected to start operation as early as next year, and the other two in 2022.
Ship & Bunker: Star Bulk Sees Gains From Scrubber Spread Hedging
Dry Bulk Firm Star Bulk, one of the shipping companies most committed to scrubbers in the run-up to IMO 2020, has set out the details of a hedging programme that has gone some way to protect the company from the declining profitability of the system this year.
Ship & Bunker: Argentinian Bunker Sales Gained 70% in First Quarter
Bunker sales at Argentina’s ports jumped by 70% in the first quarter from the same period a year earlier, according to the Argentinian Petroleum and Gas Institute.
Ship & Bunker: SDE International Sees Singapore’s 2020 Bunker Demand Holding Steady
Singapore may be able to hold onto its 2019 bunker sales volumes this year despite the effect of the COVID-19 pandemic, according to consultancy SDE International.
Ship & Bunker: VPS Reports Sharp Decline in Non-Compliant VLSFO Samples
Disputes over the sulfur content of new IMO 2020-compliant fuel blends are likely to be declining, with fewer fuels now tested as being over the new 0.50% sulfur limit, according to testing company VPS.
20 April – 16 stories in our News Round-Up this week, including the effect of Covid-19, Scrubbers and Low Sulphur fuel the economics.
Sulfur Out, Scrubbers In
IMO 2020 marks the start of shipping’s journey toward sustainability.
When it comes to environmental pollutants, carbon dioxide is public enemy number one. Yet new regulations from the International Maritime Organization (IMO) target a different toxic molecule: sulfur dioxide.
Monitoring compliance on the backburner
The Covid-19 pandemic is masking the true picture of sulphur 2020 compliance, according to maritime consultancy Hill Dickinson.
GLOBAL: Teekay reiterates IMO 2020 compliance strategy; still says ‘no’ to scrubbers
In its 2019 Sustainability Report published this week, Teekay says, ‘The scrubber in its present form is not an optimal solution to deal with the stringent and growing limitations to sulphur emission.
AMERICAS: NYC Ferry takes delivery of low-emission ferries
Hornblower’s NYC Ferry operation has taken delivery of two low-emission, Tier 4 compliance passenger ferries designed by Incat Crowther.
Ultra-low sulfur diesel is entering into competition with jet fuel and gasoline for floating storage as onland locations across Europe reach capacity amid a sharp fall in diesel demand and a very steep contango making the economics potentially workable, according to industry sources.
The fuel oil swap product comparing high sulfur fuel oil values in Northwest Europe against its Mediterranean counterpart, known by many as the Med/North, hit record lows Wednesday as HSFO came under pressure from falling bunker demand.
Argentina’s use of oil refining capacity rose to 80.1% in February from 71.7% in the year-earlier month, as rising local crude production made more supplies available for processing, a government report showed Thursday.
How 2020 sulphur rules are turning out
One of the biggest concerns brought about by 2020 sulphur rules is unexpected – the availability of traditional fuels at traditional prices. There are also concerns about mixing non compatible fuels and decreased lubricity, writes Neil Graham, technical director of Royston.
Carbon dioxide emissions under the EU Emissions Trading System fell by an indicative 8.9% in 2019 from the previous year, according to an analysis of initial figures released by the European Commission Wednesday. https://www.bunkerworld.com/news/156857
Monjasa reaps fruit from IMO 2020 preparations
Danish bunker company Monjasa reported an improved business performance on the back of the sulphur cap regulation that entered into force on January 1, 2020, marking a global transition of ships to cleaner fuels. https://assafinaonline.com/maritime-news/assafina-news/offshore-2/monjasa-reaps-fruit-from-imo-2020
Major shippers like Lego and Ikea demand climate action after coronavirus
Some of the biggest customers of container lines, like Nestlé, Lego and Ikea, demand that politicians prioritize climate change mitigation once the corona pandemic is beaten. And not to do as they did after the financial crisis, the companies emphasize.
The VLSFO price spread between the most and the least expensive of the top four bunker ports narrowed by $7.50/mt to $23/mt on Monday.
Asia LSFO market draws clean fuel feedstock on flagging gasoline demand
The Asian low sulfur fuel oil market is drawing in feedstocks for blending into the marine fuel 0.5% pool that typically go into making clean fuels like gasoline, especially low sulfur vacuum gasoil, market sources said Tuesday.
Bunker fuel inspections expected to drop as coronavirus measures take center stage in shipping
The transition to the International Maritime Organization’s global low sulfur mandate and the high sulfur fuel oil carriage ban has been relatively smooth so far but inspections are set to drop as the focus has shifted to containing the coronavirus’ spread, with safe bunkering practices, crew changes and continuity of the global supply chain in shipping receiving more attention, sources say.
Coronavirus’ spread hurts scrubbers outlook in short run: EGCSA
The coronavirus pandemic has created a grim outlook for scrubbers in the short term as some shipowners prepare to divert their capital for other uses while a few defer planned installations either due to a narrowing high/very low sulfur fuel oil spread or a shortage of manpower at shipyards, Exhaust Gas Cleaning Systems Association Director Donald Gregory said in an interview with S&P Global Platts. https://www.bunkerworld.com/news/insight/156832
Carriers cancel low-sulphur surcharges as fuel prices drop – along with demand
Container spot rates from Asia to Europe remained stable this week and, having withdrawn around a third of headhaul capacity for April, carriers will hope they have done enough to match the collapse in demand.
COVID-19 and the unsung heroes – our seafarers
Javed Ali and Sarah Barnes highlight some key points to assist shipowners in protecting their seafarers’ mental health during the unprecedented COVID-19 pandemic.
11 varied articles below featuring Sulphur 2020 – from availability to impact of Covid-19
Ship and Bunker – IMO Reports Show Sharp Drop in VLSFO Shortages
Non-availability of VLSFO is coming down – just six FONARs were filed to the IMO in February down from 42 in January.
Tradewinds – Scrubber payback pushed out to four years as spread narrows again
Clarksons Platou Securities says difference between high and low sulphur fuel now only $75.
The spread between bunker fuel with 3.5-percent and 0.5-percent sulfur is now down to USD 75. This increases the payback time on a scrubber to three to four years, writes Clarksons. https://www.tradewindsnews.com/tankers/scrubber-payback-pushed-out-to-four-years-as-spread-narrows-again/2-1-779285
Shipping Watch – Oil collapse and pandemic could prove dangerous cocktail to container lines
The low oil price could cause shipping companies to postpone scrubber installations, thereby increasing the capacity of the global fleet at a time when the global pandemic is expected to lower demand significantly, assesses Sea-Intelligence.
Container Management – MSC blames virus-related scrubber delays for IMO 2020 violation
Following the one-year ban of the MSC Joanna from UAE waters for breaching the International Maritime Organization’s (IMO) rules on high sulphur fuel oil (HSFO), MSC has explained that shipyard backlogs resulting from the coronavirus outbreak have delayed scrubber installations.
The UAE’s Federal Transport Authority stated that the ship, which has a capacity of 9,784 teu, was carrying 700 tonnes of HSFO when it called at Jebel Ali port earlier in March.
However it stated: “Many of the shipyards where EGCS installation has been taking place are in areas affected by the current COVID-19 pandemic and this has generated a large backlog of installations for shipowners.
“In particular, Chinese shipyards were closed or partially closed for a significant period of time following the extended Lunar New Year holiday as the country grappled with the new coronavirus outbreak. This has impacted shipowners’ schedules for retrofitting ships, as has been widely documented in the media.”
The shipping line acknowledged that the MSC JOANNA is one of those ships which has been subject to an EGCS delay and its installation is currently scheduled for June 2020.
Ship and Bunker – Taiwan to Introduce Universal 0.50% Sulfur Bunker Limit From July
Taiwan will source its very low sulfur fuel oil from producers CNPC and Formosa Plastics.
Ship and Bunker – Bangladesh to import cleaner 0.005% sulfur gasoil from July 2020
Bangladesh will start importing 0.005% sulfur gasoil, instead of the existing 0.05% sulfur gasoil, from July 2020 in a bid to ensure a cleaner environment, Bangladesh Petroleum Corporation, or BPC, chairman Md Shamsur Rahman told S&P Global Platts on Monday (23rd).
2 Articles in full below:
Hong Kong Shipping Daily – full article Suspension of cruise sector’s massive fuel use boosts scrubbers
THE suspension of cruise ship deployments means a sudden fall in demand for heavy fuel oil, depressing its price, and giving a boost to scrubbers, reports New York’s FreightWaves.
Cruise ships, unlike cargo ships, are voracious consumers of fuel, not only to get from A to B, but to power their massive hotel superstructures.
For example, a 10,000-TEUer sailing at 16 knots consumes 100 tons of fuel a day. Assuming 250 days at sea per year, its annual consumption would be 25,000 tons. The cruise industry’s consumption is the equivalent of three hundred 10,000-TEU ships.
Similarly, a 180,000-ton capesize bulker that burns 47 tons of fuel a day and is at sea for 300 days a year would consume 14,100 tons annually. The cruise industry consumes the equivalent of 530 capesizes.
The sudden end of cruise itineraries due to coronavirus has reduced global demand for both 3.5 per cent sulphur heavy fuel oil (HFO) and 0.1 per cent sulphur marine gasoil (MGO).
This, in turn, could affect the bottom lines of commercial ships, particularly those with exhaust-gas scrubbers.
Carnival Corporation owns 105 vessels under Carnival Cruise Lines, Princess Cruises, Holland America Lines, P&O Cruises, Cunard Line, Costa Cruises, AIDA Cruises and Seabourn Cruises.
Its ships consume 3.312 million tons of marine fuel a year at a total cost of US$1.562 billion, and the company expected to consume 3.405 million tons of fuel a year.
The IMO 2020 rule requires all ships without exhaust-gas scrubbers to consume either MGO or 0.5 per cent fuel known as very low sulphur fuel oil (VLSFO); those with scrubbers can still burn HFO.
Putting their individual estimates together, the US-listed cruise owners had been on track to consume a combined 5.8 million tons of fuel this year. On a pro rata basis, this implies that the entire global fleet would have consumed around 7.5 million tons.
The halt to cruise deployments will translate into an abrupt reduction in demand for heavy fuel oil, but not for very low sulphur fuel oil (VLSFO) because cruising favours marine gas oil (MGO) over VLSFO, giving a tailwind for the VLSFO-HFO spread, a plus for cargo ships with scrubbers.
Goldman Sachs: American GDP will shrink 24pc in second quarter
ECONOMISTS at Goldman Sachs are now forecasting a staggering 24 per cent decline in US GDP in the second quarter, reports Copenhagen’s Sea-Intelligence.
US business inventories are expected to be 10 per cent larger than just before the financial crisis when compared to the magnitude of sales, said the report.
During the financial crisis, inventories were reduced 18 per cent. Restrictions are now being implemented in ports, with a few even banning vessels if they have been in virus affected countries or shutting down when they find workers testing positive, it said.
An oil price war drastically lowers carriers?costs as well as generates a positive cash flow effect. However, it also seriously undermines the investment case for scrubbers – we have seen the low-sulphur premium drop from a peak around US$300 per ton at the start of the year down to $60 per ton.
At the same time, scrubber installations are seriously delayed in China due to the virus. The consequence might well be that vessels which were otherwise planned to go for scrubber installation instead re-enter the operational fleet. This would add more capacity to a situation where
Bunker World – Taiwan sets 0.5% sulfur cap on marine fuels for domestic ships from July
The Environmental Protection Administration of Taiwan will tighten its sulfur cap from 3.5% to 0.5% effective July 1, 2020 for all marine fuels on vessels in Taiwanese waters, bringing it fully in line with international standards, an EPA official said Tuesday. https://www.bunkerworld.com/news/156655
Ship and Bunker – Containerships Completed Scrubber Retrofits by Mid-February
The remaining 58 vessels in its fleet have switched to low-sulfur fuels to comply with IMO 2020. https://www.bunkerworld.com/news/156655
Tanker Shipping and Trade – As crude oil price reaches historical lows, Guyana’s first VLCC loads
Guyana’s first export by VLCC will have little impact in the current global market awash with cheap crude oil, but once the OPEC cartel and Russia return to their former pricing strategies, Guyana’s light low sulphur crude oil may prove popular. https://www.bunkerworld.com/news/156655
Tanker Operator – History’s largest oil glut months away from topping world storage while tanker freight rates explode
The largest oil supply surplus the world has ever seen in a single quarter is about to hit the global market from April, creating an imbalance of around 10 million barrels per day (bpd).
An exclusive Rystad Energy analysis shows global storage infrastructure is in trouble and will be unable to take more crude and products in just a few months. http://www.tankeroperator.com/ViewNews.aspx
Bunker World 2 articles:
Singapore middle distillate stocks swell to 6-month high as gasoil imports double
Singapore middle distillates stocks have ballooned to hit a six-month high after gasoil inflows more than doubled in the week ended March 19-25, Enterprise Singapore data released late Thursday showed. http://www.bunkerworld.com/news/i156708
India lockdown: Weak demand to hurt bunker industry; LSFO prices fall 15%
India’s bunker prices have declined sharply by as much as 15% due to a slump in demand as the country grapples with the deadly coronavirus pandemic by imposing a nationwide lockdown including ports. https://www.bunkerworld.com/news/156705
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.”