A recently released Global Fuels 12-month Outlook published by oil market analysis and forecasting firm ESAI Energy explains how Asia will bear the brunt of the demand shift caused by the International Maritime Organization’s new sulphur cap for shipping fuels in 2020.
“IMO is going to hit Singapore hardest,” says ESAI Energy analyst Chris Cote.
“Complex logistical changes at storage depots are already underway, but we still expect hiccups come January in the world’s busiest bunkering hub.”
According to the report, Asia makes up 40% of global bunker demand, with Singapore, China, and Hong Kong accounting for most of that market.
At the same time, the relative availability of MGO to LSFO in Asia means that MGO will be a more likely substitute in that market. In other regions, substantial shifts are taking place from HSFO to LSFO. A big shift in demand will move global markets, it explains.
At the same time, however, global economic growth and trade flows will continue to slow next year, and bunker demand is expected to contract.
The above development is expected take the edge off of the sulphur cap’s impact, but ESAI Energy still expects diesel spreads will get a boost while high sulphur fuel oil discounts will widen significantly.
Europe, meanwhile home to several other key ports, will also have to act quickly to comply with the rule.
“In Rotterdam especially, high sulphur fuel oil is going to move into surplus quickly,” adds Cote.
“The heavy discounts that result will weigh on the margins of some refiners there. Despite higher distillate premiums, there are going to be losers.”
Published: 21 June, 2019
The bunker player at Hong Kong and Chinese ports shares with Manifold Times what local shipping sectors went through during the early days of COVID-19 and how business is resuming.
April bunker sales results released on Wednesday caught several players, who expected volume to fall due to lower international trade and COVID-19, by surprise.
‘OTPL has a strong group of employees who have the requisite expertise and experience in ship chartering and management, which has commercial value and should be kept intact.’
Company believes market and business partners ‘likely to have greater confidence and comfort in continuing business dealings’ if placed under judicial management, says Director.
Panellists covered several marine fuel related topics including bunker fuel quality testing, COVID-2019, and long term storage of VLSFOs experienced during the first 100-day period.
Latest development alleges Chua Chin Lan facing total debt of approximately USD 5 million due to personal guarantees undertaken with Innovek and Global Energy Trading.