Business

Shipping to face sulphur shakeup, says ING Bank commodities strategists

Observes further upside in middle distillate cracks, while pressure is likely to persist for high sulphur fuel oil.

Published

6 years ago

December 12, 2019

Admin

Warren Patterson, Head of Commodities strategy, and Wenyu Yao, Senior Commodities Strategist, at ING Bank on Tuesday (10 December) published an analysis ‘Shipping to face the sulphur shakeup’ to share the financial institution’s view of IMO 2020; the article has been shared with Manifold Times:

The implementation of the International Maritime Organization's new sulphur regulations will lead to significant shifts in the demand outlook for refined products. We continue to see further upside in middle distillate cracks, while pressure is likely to persist for high sulphur fuel oil.

Shipping industry facing the realities
The first of January is fast approaching and with that comes the implementation of the long-awaited IMO sulphur shipping regulations, which will see the global shipping fleet having to move from burning fuel oil with a sulphur limit of 3.5% to just 0.5%. The industry has had years to prepare for this, however, and those preparations were slow to start. Many thought or hoped these regulations would be delayed. As we approach the end of the year, the industry has accepted that this really is happening and appears close to be ready to comply with the regulations.

Options for the shipping industry
The shipping industry has several options to comply with this new regulation. Shippers can turn to a compliant fuel – this could either be a very low sulphur fuel oil (VLSFO) or a marine gasoil (MGO). We believe that's the route that most shippers will take. This is already reflected in a very weak high sulphur fuel oil (HSFO) market, where spot cracks in Europe are trading at a discount of US$29/bbl to ICE Brent, a clear sign of the falloff in demand that is expected from the shipping industry. However, switching to a compliant fuel is more expensive and in recent months we have seen the spot gasoil-HSFO spread widen to around US$400/t from US$330/t back at the start of 4Q19. It is similar for the VLSFO-HSFO spread, which widened to as high as US$290/t at one stage in November, up from US$200/t at the start of 4Q19.

This strong price differential makes another option for the shipping industry more attractive. Shippers can continue to burn the cheaper HSFO as long as they have a scrubber installed on the ship. The wider we see the compliant fuel-HSFO spread trade, the more of an incentive there is for the shipping industry to go the scrubber route; at current spread levels the payback on a scrubber can be as little as one year. However, despite this attractive spread, there are a number of issues with this option. For a start, there is just not enough capacity to install all ships with scrubbers on time for the regulation, and so either way we will see a signifiFcant shift to a compliant fuel.

Shipowners may want to minimise yard-time for their vessels, particularly if freight rates are buoyant. In fact, strong tanker rates appear to have disrupted scrubber retrofits. A scrubber would also mean that a ship would need to reduce its load. There are still plenty of concerns over scrubbers and the environmental impact they have, particularly for the open-loop system. A number of ports have already banned the use of scrubbers.

Another option for shippers is to go via the LNG route. However, retrofitting vessels will be expensive and so we believe this option would be more viable for new builds. That said, there is also an issue of bunkering infrastructure for LNG, which is fairly limited at the moment.

Of course, ship owners could simply refuse to comply with the regulations, but we believe this will be minimal. We think owners will seek to avoid being fined while non-compliance also has implications for insurance, as the vessel would not be considered seaworthy if it burns non-compliant fuel. The exception to non-compliance would be where a ship has tried to secure compliant fuel but has struggled with availability. In this situation, a waiver for non-compliance would be provided.

In terms of the availability of compliant fuel, refineries are likely to increase refinery run rates to ensure adequate availability. We are also likely to see VGO diverted away from gasoline production in order to produce low sulphur compliant fuel.

Demand shifts & crack response
We believe that we could see around 2.2MMbbls/d of bunker demand shifting from HSFO to MGO/VLSFO. It is more difficult to get an idea of the split between MGO and VLSFO, as availability might prove to be an issue, whilst some shippers may be reluctant to switch to a new VLSFO at least initially, with uncertainty around how it may perform.

The use of scrubbers and also a small element of non-compliance means that we are likely to continue seeing some demand for HSFO. As a result of these shifts in demand, we continue to believe that HSFO cracks will remain weak- currently calendar 2020 3.5% fuel oil cracks in NW Europe are trading at around a discount of US$24/bbl to ICE Brent, and we expect this to weaken to an average of US$26/bbl next year.

For middle distillates, it is more difficult. We continue to hold a constructive view of gasoil cracks. However, worries over economic growth and the potential for a negative impact on oil demand growth frees up some middle distillate availability for the shipping industry, which would reduce some of the bullishness for middle distillate cracks. While the gasoil crack in NW Europe has weakened considerably over November, we do believe that the crack will trade back above US$20/bbl. This is driven by expectations of stronger demand whilst inventory levels in the US are currently around the five-year low, and in the ARA region, gasoil stocks remain below the five-year average.

Source and photo credit: ING Bank
Published: 12 December, 2019

Mass Flowmeter

Hong Kong backs MFM adoption with voluntary scheme to boost bunkering competitiveness

Hong Kong’s Marine Department launched the Quality Bunker Operator Scheme to encourage bunker operators to install and use mass flow meter systems on their bunker vessels.

Published

7 hours ago

June 4, 2026

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Hong Kong’s Marine Department (MD) on Wednesday (3 June) launched the Quality Bunker Operator Scheme to encourage bunker operators to install and use mass flow meter systems (MFM systems) on their bunker vessels.

MD said the scheme aims to enhance Hong Kong’s bunkering service quality and the competitiveness of Hong Kong ports, thereby further consolidating Hong Kong’s position as an international maritime centre and a major bunkering port.

Under the Scheme, bunker operators of traditional maritime fuel and biodiesel that install and use MFM systems on their bunker vessels, with the MFM systems inspected and certified by an accredited body in accordance with the International Organization for Standardization’s ISO 22192 Standard or equivalent requirements, can apply to the MD for inclusion in the scheme’s “List of Quality Bunker Vessels”, provided they meet the relevant technical and operational requirements.

Details of the bunker vessels successfully included in the List will be published on a dedicated page on the MD’s website for reference by shipping companies and relevant stakeholders.

Participation in the Scheme is voluntary. In addition to receiving recognition from the MD, participating bunker operators will benefit from enhanced corporate image and competitiveness through the adoption of MFM systems, thereby boosting customers’ confidence and helping to create new business opportunities.

A spokesman for the MD, said: “As an international maritime centre supported by our country, Hong Kong has a strategic location adjacent to major international fairways. Coupled with years of development in marine fuel bunkering, Hong Kong possesses rich experience and talent in the field. For many years, Hong Kong has consistently ranked as the seventh-largest bunkering port globally, the second-largest in our country, and the largest in the Greater Bay Area, providing reliable and competitive fuel bunkering services to ocean-going vessels from around the world.

“As the international shipping industry has an increasing demand for accuracy and transparency in bunkering services, service quality and measurement precision in bunkering operations have become important indicators of a bunkering port’s competitiveness. The Scheme will enhance bunkering accuracy and transparency, further enhancing the quality of Hong Kong’s bunkering services.

The spokesman added that comprehensive port services are one of Hong Kong’s key advantages as an international maritime centre.

“We will also mandate the use of MFM systems on all methanol bunker vessels this year to ensure that Hong Kong continues to provide high-quality bunkering services in the era of green maritime fuels.”

Note: The application form for the Scheme can be found on the MD’s website. Interested bunker operators can download the application form from the website or contact the MD’s Green Maritime Fuel Team via email ([email protected]) for details.

Photo credit: Manifold Times
Published: 4 June, 2026

Alternative Fuels

MPA and MSC ink MoU to support adoption of alternative bunker fuels

MPA and MSC will explore new routes and services to strengthen connectivity, support the adoption of alternative marine fuels such as bio-LNG, and advance technologies to improve vessel energy efficiency.

Published

8 hours ago

June 4, 2026

Admin

MPA and MSC ink MoU to support adoption of alternative bunker fuels

The Maritime and Port Authority of Singapore (MPA) on Wednesday (3 June) said it signed a Memorandum of Understanding (MoU) with MSC Mediterranean Shipping Company to strengthen collaboration in maritime decarbonisation, digitalisation, innovation, and manpower development.

The MoU was signed on 25 May 2026 by Mr Ang Wee Keong, Chief Executive of MPA, and Mr Soren Toft, Chief Executive Officer of MSC.

The MoU underscores the shared commitment of MPA and MSC to foster a sustainable, digital, and future-ready maritime sector, while enhancing MSC’s operational and business activities in Singapore. This year also marks the 30th anniversary of MSC establishing its Asia Regional Office and local office in Singapore.

Under the MoU, MPA and MSC will explore new routes and services to strengthen connectivity, support the adoption of alternative marine fuels such as bio-LNG, and advance technologies to improve vessel energy efficiency and operational performance.

MPA and MSC will also collaborate on maritime digitalisation initiatives to improve operational efficiency, including streamlining vessel arrivals and port operations.

On manpower development, MSC will support internship and scholarship opportunities through Singapore Maritime Foundation’s Maritime Outreach Network (MaritimeONE) platform, an industry-led tripartite partnership comprising industry, government and institutes of higher learning that aims to raise awareness of the maritime industry and attract quality talent into the maritime sector.

Mr Ang Wee Keong, Chief Executive of MPA, said: “This partnership reflects the strong collaboration between MPA and MSC in driving sustainability and digitalisation in the maritime sector. By working together on decarbonisation, operational efficiency and talent development, we aim to strengthen Maritime Singapore’s position as a trusted and future-ready global maritime hub.”

Mr Soren Toft, Chief Executive Officer of MSC, said: “Singapore is a strategically important hub for MSC and a key gateway to the broader Asia region. As we mark 30 years in Singapore, this MOU reinforces our long-term commitment to strengthening our presence here. MSC and Singapore are closely aligned on the priorities shaping the future of global shipping, and we look forward to deepening this partnership to drive the continued growth and resilience of the maritime industry.”

Photo credit: Maritime and Port Authority of Singapore
Published: 4 June, 2026

Emissions reporting

StormGeo and OceanScore link emissions data, compliance workflows

Cooperation combines StormGeo’s expertise in operational vessel and emissions data with OceanScore’s expertise in emissions compliance workflows across EU ETS, FuelEU Maritime and UK ETS requirements.

Published

8 hours ago

June 4, 2026

Admin

StormGeo and OceanScore link emissions data, compliance workflows

Weather intelligence and decision support solutions provider StormGeo and Hamburg-based technology platform OceanScore on Wednesday (3 June) said they have deepened their ongoing cooperation through the signing of a collaboration agreement during Posidonia 2026 in Athens on 2 June.

The cooperation combines StormGeo’s expertise in operational vessel and emissions data with OceanScore’s expertise in emissions compliance workflows across EU ETS, FuelEU Maritime and upcoming UK ETS requirements.

Together, the companies aim to help shipping companies seamlessly navigate increasing regulatory complexity more efficiently — from emissions reporting and data validation to compliance exposure management, pooling and financial settlement.

As emissions regulation becomes an increasingly important part of commercial shipping operations, the need for reliable operational data and streamlined compliance processes continues to grow. The cooperation between StormGeo and OceanScore is designed to support shipping companies with more connected, transparent and actionable processes across operational and commercial teams.

“From the outside, companies like StormGeo and OceanScore may sometimes be perceived as competitors because both operate around emissions and compliance workflows,” said Albrecht Grell, Managing Director at OceanScore.

“But in reality, the industry increasingly needs both perspectives working together: trusted operational emissions data on one side and commercial compliance execution on the other. Our cooperation reflects that shipping companies are no longer looking for isolated solutions — they need connected processes, automated across different systems and reliable decision-making throughout the full compliance chain.”

By connecting validated operational emissions data with commercial compliance management, the cooperation supports workflows across:

emissions reporting and validation
compliance management across EU ETS, FuelEU Maritime and upcoming UK ETS requirements
exposure visibility and cost transparency
pooling, settlement and financial processes

The cooperation also aims to improve commercial transparency and coordination across operational and commercial stakeholders.

“StormGeo plays a central role in helping shipping companies turn operational vessel and emissions data into trusted, decision-ready insights,” said Espen Martinsen, Chief Commercial Officer at StormGeo.

“As emissions regulations become more complex, this data is essential for transparent and efficient compliance management. By working with OceanScore, we can help customers connect StormGeo’s validated operational data with commercial compliance processes, creating a more integrated and practical approach to emissions management.”

The signing ceremony took place at the StormGeo booth during Posidonia 2026 in Athens and was attended by representatives from both companies.

Both companies expect the cooperation to continue evolving alongside upcoming regulatory developments, including FuelEU Maritime, EU ETS, the upcoming UK ETS and future emissions-related frameworks affecting global shipping.

Photo credit: StormGeo
Published: 4 June, 2026