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IMO 2020

Think-ING: Marine fuels & IMO 2020 – So much for all the hype

Compliance with the new fuel regulations has been quite strong, looking at Singapore ports, around 96% of ships entering the port in Q1 were using a compliant fuel.

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Think-ING, an online publication by Dutch multinational banking and financial services corporation ING on Tuesday (21 July) published an assessment on how the IMO2020 transition has impacted industry stakeholders, suggesting that the effects of Covid-19 have created a soft landing for the shipping industry; it was written by Warren Patterson, Head of Commodities Strategy.

We are now well into the IMO 2020 shipping regulations, and it is clear that all the hype leading up to implementation was exaggerated. Covid-19 has certainly softened the impact of the shipping industry’s move to a low sulphur compliant fuel

In this article:

  • VLSFO the fuel of choice
  • China plays a role in the VLSFO weakness
  • Weaker road fuel demand adds to the pressure for VLSFO
  • HSFO holding up
  • What does this mean for scrubbers?

VLSFO the fuel of choice

As the shipping industry has moved further into 2020, and with the need to comply with new regulations to cap the sulphur content of fuel burned to 0.5% compared to 3.5% previously, it has become clearer that the fuel of choice for ship owners is very low sulphur fuel oil (VLSFO), rather than a marine gasoil. This is evident when looking at bunker fuel sales in Singapore, with VLSFO making up almost 70% of total fuel oil sales in the first six months of the year, this compares to around 11% when it comes to marine gasoil. Meanwhile, given the use of scrubbers on some vessels, high sulphur fuel oil (HSFO) sales made up around 18% of total sales.

In general, compliance with the new fuel regulations has been quite strong. Again, looking at Singapore ports, over the first quarter of this year, around 96% of ships entering the port were using a compliant fuel. Whilst those which were marginally over were likely due to residual HSFO in the tanks, rather than purposely using a non-compliant fuel.

Singapore bunker fuel sales (k tonnes)

Screen Shot 2020 07 22 at 12.41.42 PMChina plays a role in the VLSFO weakness

Despite the preference for VLSFO from the shipping industry, this has offered little support to VLSFO prices. While the flat price would have come under pressure anyway, given the weakness we have seen in oil prices, the fuel has been relatively weaker compared to other marine fuels, and in particular HSFO. The spread between VLSO and HSFO has narrowed significantly over the course of the year. Back at the end of last year the spot spread in NW Europe was trading as high as US$290/t, whilst so far this year it has traded briefly below US$45/t.

The initial weakness seen in VLSFO came after news that the Chinese government would waive a consumption tax, and provide a VAT rebate on fuel oil sales to bonded storage. This has seen refiners in the country increase VLSFO output as a result. According to government data, fuel oil output in the country over the first six months of the year totalled 17.48mt, up almost 53% year-on-year. On top of this, the government provided export quotas for VLSFO amounting to 10mt, with the potential for a further 5mt to be allocated later in the year.

These actions that we have seen from China do make it fairly clear that the country wants to reduce its dependence on fuel oil imports, as well as play a larger role in the global bunkering market, and this view is only strengthened with the Shanghai International Energy Exchange (INE) launching a VLSFO futures contract in June.

NW Europe VLSFO-HSFO spread (US$/t)

Screen Shot 2020 07 22 at 12.41.54 PMWeaker road fuel demand adds to the pressure for VLSFO

Covid-19 has only added further pressure to VLSFO, with road transportation having been hit significantly as a result of country lockdowns. This has meant that vacuum gasoil (VGO) which would have gone towards gasoline production has been diverted to bunker blending, given the fall away in gasoline demand. This has helped to ensure enough VLSFO availability for the shipping industry. However, with gasoline demand now in recovery mode, this should mean that we start to see increasing amounts of VGO diverted back towards gasoline production as we move through the remainder of the year, which should offer some relative support to VLSFO. The risk to this view though, is if the resurgence in Covid-19 cases that we are currently seeing does lead to strict lockdowns once again, which could weigh on demand for road transportation fuels.

HSFO holding up

While VLSFO has come under pressure as a result of developments in China and Covid-19, HSFO has held up much better, with HSFO cracks strengthening over much of the year. In fact in NW Europe, the HSFO crack has traded back to pre-IMO 2020 levels, recently trading at one stage to less than a US$6/bbl discount.

From a supply point of view, it is clear that refiners would have reduced HSFO yields as much as possible in the lead up to the new sulphur regulations, in anticipation of demand falling off a cliff. In OECD countries, we ended last year with residual fuel oil yields at 4.7%, down from 6.1% a year earlier.

However on the demand side, whilst ships with scrubbers installed would ensure some demand for HSFO, the real supportive factor for the HSFO market has been increased buying from US refiners. In recent months, complex refiners in the US have increased the use of HSFO as a feedstock, with large discounts to crude back at the end of last year supporting this move, whilst more recently, strength in sour crude grades as a result of OPEC+ cuts will likely continue to support HSFO as a feedstock. Looking at EIA data, residuum imports into the US over the first four months of the year averaged 329Mbbls/d, compared to around 95Mbbls/d over the same period last year.

US residuum imports (Mbbls/d)

Screen Shot 2020 07 22 at 12.42.05 PMWhat does this mean for scrubbers?

Clearly, the significant narrowing in the VLSFO/HSFO spread does mean that many ship owners who had planned to install scrubbers, which would allow them to continue burning HSFO, will likely reconsider this decision, or at least delay installations until the spread widens once again. The payback period for the investment has increased drastically as the spread has collapsed. The payback period at the start of the year would have been in the region of one to two years, however with the spread now not too far off from US$50/t, this has increased to four to six years. Clarkson’s has said that the industry could see as many as 700 retrofits of scrubbers delayed or cancelled altogether as a result of the narrow spread.

There are reports that owners have already started to cancel scrubber installations, as a result of the weaker spread. The uncertainty created by Covid-19 will not have helped. This has not only delayed installations but also raised worries over the impact it will have on trade in the months ahead.


Photo credit and source:
Think-ING
Published: 22 July, 2020

 

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Ammonia

AM Green plans to build green ammonia plant at Indian port

Initiative also includes development of green ammonia handling, storage and bunkering infrastructure, pilot bunkering operations, safety procedures and training programmes, says VOC Port Authority.

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VO Chidambaranar (VOC) Port Authority on Friday (29 May) said it has signed a Memorandum of Understanding (MoU) with India’s ammonia producer AM Green Ammonia to collaborate in the development of a green ammonia production plant.

The plant will have a capacity of one million tonnes per annum (MTPA) at Tuticorin.

The initiative also includes development of green ammonia handling, storage and bunkering infrastructure, pilot bunkering operations, safety procedures and training programmes. 

The project is expected to support the development of green fuel corridors connecting VOC Port with major ports in Europe and Asia, thereby strengthening India’s position in the global green fuels value chain.

VOC Port also signed a Memorandum of Understanding (MoU) with Bureau Veritas (India) Pvt. Ltd., to collaborate on Green Port certification, emissions accounting, ESG reporting, safety validation, development of green bunkering practices, and establishment of a Centre of Excellence for green fuels and sustainability.

The port also plans for an upcoming 750 m³ green methanol bunkering facility.

 

Photo credit: Naveed Ahmed on Unsplash
Published: 3 June, 2026

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Port & Regulatory

Study: Major drop in ship sulphur emissions confirmed following IMO regulations

National Centre for Atmospheric Science study found that the average sulphur content in ship fuel dropped nearly tenfold in open ocean areas following IMO’s 2020 regulation.

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Recent global regulations have significantly reduced sulphur emissions from ships, helping to improve air quality in coastal regions – confirmed by a recent international study led by researchers at the National Centre for Atmospheric Science. 

The research, published in Environmental Science: Atmospheres, used aircraft and ground-based instruments to measure sulphur dioxide and nitrogen oxides emitted by ships in the North-East Atlantic and European coastal waters between 2019 and 2023.

The team found that the average sulphur content in ship fuel dropped nearly tenfold in open ocean areas following the International Maritime Organization’s 2020 regulation, which capped sulphur content in marine fuel at 0.5%. 

Before the change, many ships exceeded the previous 3.5% limit. After 2020, only a small number of ships were found to breach the new standard.

In European sulphur Emission Control Areas (SECAs), such as the English Channel and the Port of Tyne, sulphur levels were even lower – well below the stricter 0.1% limit. Interestingly, ports outside these zones, like Valencia in Spain, also showed low sulphur levels, likely due to EU rules requiring cleaner fuel when ships are docked for extended periods.

This is the first study to use aircraft-based measurements and predictions from the Ship Traffic Emission Assessment Model (STEAM3) to assess ship emissions outside of sulphur control zones since the 2020 regulation came into effect. The findings support the widely held view that ships now emit around seven times less sulphur than before the rule change – an important step toward cleaner air and healthier coastal environments.

Note: The research, titled ‘SO2 and NOx emissions from ships in North-East Atlantic waters: in situ measurements and comparison with an emission model’ can be found here. 

 

Photo credit: shraga kopstein on Unsplash
Published: 8 December, 2025

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Interview

IBIA Annual Convention 2025: ‘Exciting times’ for post IMO 2020 bunker suppliers, states Equatorial

Choong Sheen Mao, Chief Operating Officer, Equatorial, describes to Manifold Times the pre/post IMO 2020 challenges and evolution of bunker suppliers.

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The International Bunkering Industry Association (IBIA) will be hosting its flagship Annual Convention in Hong Kong at the Hong Kong Convention Exhibition & Convention Centre between 18 to 20 November 2025, as part of Hong Kong Maritime Week.

Choong Sheen Mao, Chief Operating Officer, Equatorial Marine Fuel Management Services (Equatorial), speaks to bunkering publication Manifold Times about the challenges of a post IMO 2020 bunker supplier.

MT: How does Equatorial continue to offer customer assurance and maintenance of marine fuel quality to ISO8217 standards despite increasing complexity of bunker fuel blends?

We maintain our focus to provide compliant, quality and competitively priced products to our customers. There is no shortcut. We source our products from a wide range of cargo producers and suppliers. We continue to be strict and vigilant with our testing programme for our products before delivering them to our customers. Equatorial has deepened our engagement with the wider industry to have a better and up-to-date understanding of the existing and new marine fuels.

MT: Can you share the evolution of commercial marine fuel procurement, blending and trading strategies on the back of increasing fuel types (pre/post IMO 2020)?

Pre IMO 2020, the main types of marine fuel procured and consumed by vessels were high-sulphur fuel oil, marine diesel oil and marine gas oil. Trading strategies were therefore closely linked to that within the oil industry.

However, many of the new fuel types are from other industries. For example, biofuels, methanol and ammonia are mainly products from the chemical and agriculture industries. There are marked differences between these industries and the energy industry (in particular, the marine fuels industry). LNG is from the gas industry which is distinct from the oil industry.

Without an existing liquid paper market for many of these commodities (especially as a marine fuel), the price risk management is less straightforward. Furthermore, commodity prices are no longer the sole consideration for price itself. The price of compliance must be considered. This could range from guaranteeing the origin of the marine fuel, its sulphur properties as well as its carbon intensity. The list goes on.

MT: Operational wise, what are the changing role and responsibilities of a bunker supplier to date, compared to before IMO 2020?

The role and responsibility of a bunker supplier have evolved. Fundamentally, it has been about providing quality marine fuels at competitive prices. Quantity assurance has been a critical concern which led to the mandatory implementation of the mass flow meter system for bunkering in the Port of Singapore. Interestingly, due to the nature of credit terms in the bunker industry, bunker suppliers also performed the role of “bankers” by extending favourable credit terms to shipowners and charterers.

These days, post IMO 2020, things have become even more complicated. Today, a bunker supplier retains the abovementioned roles and responsibilities, and much more – it has to ensure compliance with a plethora of rules and regulations. Compliance not only with sulphur cap requirements, but with international and regional sanctions and restrictions unrelated to the quality of the marine fuel itself. In fact, especially with alternative low- and zero-carbon marine fuels, this means compliance with standards, rules and regulations on sustainability such as the European Renewable Energy Directive and/or International Sustainability and Carbon Certification. There is also the need to comply with increasingly stringent safety regulations on both conventional and alternative marine fuels.

In addition to the above, a post IMO 2020 bunker supplier is still expected to supply compliant and quality fuel at competitive prices.

MT: Equatorial is Singapore’s largest local-born supplier; what is the next big thing for the company?

Equatorial continues to adapt and improve with the times, while maintaining its core values – Integrity, Teamwork, Commitment, Proficiency and Quality, and Safety and Environment. The bunker industry is a highly competitive one, and it is our intention to keep our competitive edge and remain relevant. This means that we have had to step out of our comfort zone and embrace the two mega trends of our time – digitalisation and decarbonisation.

We have been early adopters and developers of the electronic bunkering note as part of our own digital bunkering efforts. We have diversified our product offering to include low carbon marine fuels and are proud to be one of the pioneers for bunkering B100 biofuels earlier this year. This was made possible by the arrival of our IMO Type II chemical and oil bunker tankers. These same bunker tankers are also capable for carrying and delivering methanol. Equatorial has invested in an LNG bunkering vessel (LBV) newbuilding that is set to be delivered in Q3 2027. We are also involved in a study to develop low- or zero-carbon ammonia bunkering in Singapore.

These are exciting times.

Note: Choong Sheen Mao is amongst panellists featured in ‘Session Three: Bunker Sellers Panel’ at the IBIA Annual Convention 2025.

Join the Conversation

With over 300 delegates expected, the IBIA Annual Convention 2025 is set to be a defining moment for the marine fuels industry. Registration is now open via the IBIA Annual Convention website.

 

Photo credit: Manifold Times
Published: 31 October 2025

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