WHEN WILL THE DEMAND FOR HSFO DROP OFF?

The global sulphur cap comes with so many side issues – scrubbers, insurance and compliance – that ship owners and operators will need to be on their toes well before the regulations actually come into force on 1 January 2020. The lack of compliant fuel has always been seen as a major stumbling block in the short-term; where will the bunkers be that can offer this fuel and when will it be widely available? We have looked at this issue before: ships being stranded because lack of compliant fuel and concerns that some ships might have to use non-compliant fuel if there is an initial shortage – all these are worries ship owners and operators will face in the early stages of the compliance changeover.

One pressing thought: when will the demand for HSFO drop off? This will happen at some stage in 2019 and then the other question is – when do you start cleaning your tanks ready to accept the new fuel? Bunkering is the issue and so is the refining process. The demand for new fuel will almost certainly be high in the latter part of 2019 and the first month of 2020. The refining process and production of low sulphur fuel is placing demands on both sides of the industry. The trick for ship owners and operators is making the date for transition work in terms of cost and operational supply.

Recent report have suggested African bunker fuel markets could struggle to implement the IMO sulphur cap and the suggestion is this could be down to extensive competition from Mediterranean ports and the question of marine fuel quality. Once again the question of quality of the product rather than the initial price is the issue. Availability and compliance are not always natural bedfellows in any industry but when it comes to the 326 million cubic miles of ocean, the world’s ships are expecting more than a sign saying “No Fuel Today!”

Mediterranean bunker fuel prices exceed two-year highs on HSFO backwardation

Bunker fuel prices at various ports in the Mediterranean reached their highest points in over two years last Friday, supported by the tight availability of high sulphur fuel oil in the region. This trend may continue in the short term. More cargoes are expected to be offered for mid-November, which will help rebalance the tight supply side, seeping into the bunker complex for late November, according HSFO sources.

Read more here: Hellenic Shipping News

Generous bunker credit terms could become a thing of the past come 2020

The new regulations of the global sulphur cap, coming into force at 2020, are not only likely to put pressure on the supply of suitable fuel oil to the market but also to the supply of credit. In a recent presentation at the Aracon bunker event, head of credit Paul Millar at physical supplier and bunker trader Bomin Group outlined his views on the subject. The increase in bunker prices post-2020 may force some shipping companies out of the market while credit managers will also come under pressure to raise credit lines to cover increased fuel costs. According to Millar, those companies in the bunker supply chain that are least equipped to handle any inflated financial demands will be most likely to suffer.

Read more here: Ship&Bunker

2020 compliant marine fuel costs a source of headache for ship owners

Not only will the implementation of a sulphur limit starting in 2020 change the fuel quality and availability but also the economics of shipping and particularly on bunker prices. In total 3 million barrels per day of high sulphur fuel oil Bunkers will need to switch to 0.5% sulphur fuel through blending or hydrocracking leading to higher production costs and thus driving up the fuel cost.

Read more here: Hellenic Shipping News

Gunvor predicts wide high/low sulphur price spread post-2020

In the opinion of trading house Gunvor a wide price gap between high sulphur and low sulphur bunker fuel will result from the new regulations for sulphur in 2020. As Torbjorn Tornqvist, oil trader’s CEO, mentioned recently that ship owners would naturally tend to opt for distillate fuel with a consequent fall in aggregate demand for high sulphur fuel oil in 2020.

Read more here: Ship & Bunker