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Argus Media viewpoint: US high sulphur distillates still in demand

US high sulphur distillates may prove profitable going into 2020 despite IMO 2020 global sulphur limit.

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Editor: A correction for frequency has been made to paragrpah five in the following article on Wednesday (8 January)

Wendy Dulaney of global energy and commodity price reporting agency Argus Media on Thursday (2 January) issued a report highlighting US refiners continue finding buyers in Latin America for high-sulphur heating oil (HSHO) despite IMO 2020 new regulations on sulphur limit:

The International Maritime Organization capped marine fuel sulphur emissions at 0.5pc effective 1 January, down from the prior level of 3.5pc. As refineries have upgraded over the years to meet ever tighter sulphur regulations, few refiners aim to produce distillates above 15ppm sulphur, or 0.0015pc.

Nonetheless, a few US refiners have been able to maintain a stable rate of production for higher-sulphur distillates at a profitable margin since 2016 because of export demand.

Gulf coast refiners, which produce 80-90pc of all high-sulphur heating oil (HSHO) in the US, have averaged higher production over the past two years in response to export demand. HSHO is used in various parts of the world for power generation, marine fuel blending, and use in agricultural vehicles.

The Gulf coast has produced an average 5.4mn b/d bl/month of HSHO through 2018 and 2019, up from 4.6mn b/d for 2016-2017, according to data from the US Energy Information Administration (EIA). Most of this production is exported to Latin America. Brazil is historically the largest single taker of US HSHO, where it is used primarily for power generation and agricultural vehicle use in some areas. The average amount exported to Brazil has risen year over year, from 150,000 bl/month in 2017 to 280,000 bl/month on average in 2018 and 520,000 bl/month for the first nine months of 2019, according to EIA export data.

After Latin America, the next largest importer of HSHO is Singapore, where it is used as a marine fuel blending component in what is the world's largest bunkering hub. Exports to Singapore have been higher in 2019 than the previous year at an average of almost 540,000 b/month, despite preparations in Singapore for the new low-sulphur marine fuel regulations.

HSHO also makes its way to Gibraltar in large amounts, where it is re-exported to West Africa, largely for agricultural use.

While agricultural demand for HSHO will continue in Latin America and West Africa, the continued profitability of HSHO may depend on how the marine fuel industry chooses to solve the complex problem of meeting IMO 2020 regulations.

Scrubber systems may allow the use of marine fuels that meet or even exceed the previous maximum of 3.5pc sulphur. In this case, HSHO may continue to be a viable option for blending, as HSHO produced in the US typically ranges from 0.05pc to 0.2pc.

The complexity for blending marine fuels using HSHO comes from its molecular properties. Distillates like HSHO create condensates when they are blended with residual fuel oils, unless they are held in suspension with additives. The economic viability of blending with additives is specific to routes, ports, and even individual types of ships.

One example of route and port complexity is that scrubbers are banned from many large ports, such as Singapore. Even in ports where scrubbers are allowed, the coastal seawater is often too acidic for scrubbers to work properly. Scrubbers rely on water such as is found in the open ocean. Ships may be forced to switch to fuel blends for entering and leaving coastal areas — or may choose to be out of compliance. The International Energy Agency (IEA) estimates that more than 700,000 b/d of non-compliant fuel will be used world-wide in the first year of IMO 2020.

HSHO is most easily blended with other distillates, making it an option for blending with ultra-low sulphur diesel (ULSD) or with marine gas oil (MGO). HSHO is not a good option for use as a fuel on its own despite being within IMO 2020 regulations, as it is no longer profitable enough to be produced in economical quantities but still remains too expensive for large-volume fuel use.

Gulf coast HSHO on the Colonial pipeline averaged $1.76/USG for the fourth quarter of 2019, down from $1.97/USG in the fourth quarter of 2018. Margins for HSHO against Western Canadian Select crude have been steadily increasing for several months, near 20¢/USG in late December, up from 11¢/USG in early April. Margins for HSHO have historically been higher during the winter months but spiked to all-time highs of 30¢/USG for the first times during the fall of 2018 and 2019.

Photo credit and source: Argus Media
Published: 3 January, 2020 
 

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Alternative Fuels

Yang Ming orders six LNG dual-fuel, ammonia-ready containerships from Hanwha Ocean

Each of the six new vessels will have a capacity of up to 13,650 TEU and feature LNG dual-fuel propulsion and Ammonia Fuel Ready specifications.

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Yang Ming orders six LNG dual-fuel, ammonia-ready containerships from Hanwha Ocean

Taiwanese shipping firm Yang Ming Marine Transport Corporation (Yang Ming) and South Korean shipbuilder Hanwha Ocean on Wednesday (2 September) signed a shipbuilding contract for six 13,000 TEU class LNG dual-fuel container vessels. 

The contract was signed by Dr. Chuck Tsai, Chairman of Yang Ming, and Mr. Charles Kim, CEO of Hanwha Ocean. The vessels are scheduled for delivery between 2028 and 2029. 

They will complement Yang Ming’s existing fleet of 10,000+ TEU vessels and serve as key vessels on East-West services, with deployment flexibility across trade lanes connecting Asia with the East and West Coasts of North America, South America, and the Mediterranean. 

Each of the six new vessels will have a capacity of up to 13,650 TEU and feature LNG dual-fuel propulsion and Ammonia Fuel Ready specifications.

“As Yang Ming transitions toward net-zero emissions, LNG provides a relatively mature and economically viable alternative fuel solution, capable of reducing greenhouse gas emissions by approximately 20%,” the company said. 

“At the same time, ammonia can serve as a carbon-free fuel by utilising converted LNG storage facilities, while offering relatively lower conversion costs and comparatively well-developed supply chains and infrastructure. The Ammonia Fuel Ready design will therefore provide Yang Ming with greater flexibility in responding to increasingly stringent international regulations on greenhouse gas emissions.”

In addition, the vessels will be equipped with Type B LNG fuel tanks with a design pressure of 1.0 bar to enhance the safety and efficiency of LNG operations, together with a range of energy-saving technologies, including Wind Shields, Rudder Bulbs, Pre-Swirl Stators, and Shore Power Systems. Smart ship technologies and cybersecurity protection features will also be incorporated to enhance operational efficiency, safety, and reliability while effectively reducing fuel consumption and greenhouse gas emissions.

Deliveries under Yang Ming’s next-generation fleet optimization plan commenced earlier this year. By 2030, a total of 24 new vessels are expected to enter service. 

This includes 18 LNG dual-fuel vessels—comprising five 15,500 TEU, seven 16,000 TEU, and the six 13,000 TEU vessels under this contract—alongside six 8,000 TEU methanol dual-fuel-ready ships. 

 

Photo credit: Yang Ming Marine Transport
Published: 4 September, 2026

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Alternative Fuels

LR, China’s MARIC unveil tanker concept ready for three future bunker fuels

Both secured AiP for a new 114,000 DWT product and crude oil tanker designed to accommodate future conversion to LNG, methanol or ammonia.

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LR, China’s MARIC unveil tanker concept ready for three future bunker fuels

Lloyd’s Register (LR) and the Marine Design and Research Institute of China (MARIC) on Thursday (3 September) have secured Approval in Principle (AiP) for a new 114,000 DWT product and crude oil tanker designed to accommodate future conversion to LNG, methanol or ammonia.

Announced at SMM 2026, the concept addresses one of the biggest investment challenges facing shipping today: the need to develop vessels and capabilities that can support a range of alternative fuel options and pathways as technologies, infrastructure and regulations evolve.

While LNG is already a mature fuel pathway, methanol and ammonia remain at an earlier stage of development, with questions around global fuel availability, infrastructure development, economics and long-term adoption.

The 114,000 DWT tanker concept has been designed as a product and crude oil carrier that can accommodate future conversion to LNG, methanol or ammonia as technologies, regulations and fuel supply chains mature. By incorporating conversion readiness at the design stage, the concept aims to reduce future retrofit complexity and provide owners with greater confidence when planning long-term fleet investments.

The design concept was reviewed against LR’s July 2026 class rules and regulations, including requirements relating to ships using gases and other low-flashpoint fuels, alongside relevant IACS Common Structural Rules for oil tankers. Final classification and statutory approval remain subject to full compliance with all applicable rules and regulations.

Theo Kourmpelis, Global Business Director for Tankers, Lloyd’s Register, said: “Shipowners are being asked to make major investment decisions today despite continued uncertainty around which fuels will dominate in the decades ahead. Alternative fuel solutions each offer potential pathways to compliance, but fuel infrastructure, regulation and economics continue to evolve at different speeds around the world.

“Designs that preserve flexibility will be critical in helping owners manage risk while preparing for multiple future scenarios.”

Si Nan, Marine & Offshore Marketing Department Vice Director, MARIC, said: “As the industry explores different decarbonisation pathways, shipowners need vessel designs that can adapt alongside technological and regulatory developments. This concept was developed specifically to provide greater fuel flexibility and long-term resilience, allowing owners to respond to changing market requirements without being locked into a single fuel strategy.

“Receiving Approval in Principle from Lloyd’s Register is an important milestone that validates the design concept and supports its future development.”

 

Photo credit: Lloyd’s Register
Published: 4 September, 2026

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Alternative Fuels

DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024

LNG-fuelled vessels accounted for the vast majority of August activity while the strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year.

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DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024

Latest data from classification society DNV’s Alternative Fuels Insight (AFI) platform alternative-fuelled vessel ordering was strong in August, with 52 new vessels added to the platform.

This is the highest monthly total since October 2024 and follows another active month in July, when 47 vessels were added to the database.

LNG-fuelled vessels accounted for the vast majority of August activity, with 46 orders recorded. The container segment led the way with 30 orders, while the car carrier segment contributed a further 12 LNG-fuelled vessels. In addition, four ethanol-fuelled bulk carriers and two hydrogen-powered bulk carriers were added during the month, as well as one LNG bunker vessel.

The strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year. In total, 242 alternative-fuelled vessel orders have been placed in the first eight months of 2026, representing a 27% increase compared with the same period in 2025.

LNG remains the dominant fuel choice, accounting for 63% of all alternative-fuelled vessel orders registered so far this year. Container vessels represent the largest share of these LNG orders (59%), followed by car carriers (30%).

Jason Stefanatos, Global Decarbonization Director at DNV Maritime, said: “The past two months have been particularly strong for alternative-fuelled vessel ordering, with August recording the highest monthly total we’ve seen since October 2024. This has helped lift year-to-date orders to a level well above the same period last year.

“LNG remains the leading fuel choice, driven largely by activity in the container and car carrier segments. These sectors have been among the earliest adopters of alternative fuels, supported by predictable liner operations and increasing demand from cargo owners to reduce emissions across supply chains. 

“For many owners, LNG offers a combination of emissions reductions, fuel availability and future flexibility while the longer-term fuel landscape continues to evolve. 

“At the same time, the latest figures include orders for ethanol- and hydrogen-fuelled vessels, highlighting that owners continue to explore a range of decarbonization pathways. Different segments are making different fuel choices, but the overall level of activity demonstrates continued investment in lower-emission shipping.”

Screenshot 2026 09 04 at 12.29.26 PM Screenshot 2026 09 04 at 12.29.36 PM

 

Photo credit: DNV
Published: 4 September, 2026

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