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.

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Bank of Amerika predicts distillates to dominate initial post-2020 bunker scene

Refinery

According to a report from the Bank of America Merrill Lynch ship owners are likely to go for distillate bunker fuel over other alternatives to heavy fuel oil to meet the requirements of the new global sulphur cap in 2020. Furthermore, BofAML believes that the refining sector is not ready for the changes ahead and questions the infrastructure for LNG bunkering.

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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.

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