Soren Holl, CEO of International bunker broking and trading firm KPI Bridge Oil on Monday (25 November) published an industry update on the company’s website disclosing that the group’s sale of 2020 compliant fuels now exceeds sale of high sulphur fuel oils for the first time:
Høll comments: “We started fixing 0.5% sulphur contracts in flow ports at the beginning of Q2 and, as expected, the demand from business partners looking to secure availability of 2020 compliant fuels has steadily increased since. In this final stage of the switch to 2020 compliant fuels we’re experiencing significant price and availability fluctuations in most ports around the world as the market adjusts. We have previously talked about an anticipated price differential of 30-40% between compliant and non-compliant fuels, depending on region and local availability and this upward drive on prices seems to be materialising.
We are consequently also still expecting to see a shortage of available credit in the market moving into 2020. Like most of the leading players in the bunker industry, KPI Bridge Oil has been preparing for the expected market changes for a long time. We secured access to a new large revolving credit facility and undertook a comprehensive internal review of our business model to prepare our systems, operations and team members for the 2020 regulations.
Apart from advising on anything from local availability, port differentials, and route planning to how to prepare tank inspections, barge preparations, performing compatibility tests and risk assessments, we also established a management level global function which operates across functions and our 11 offices to specifically support individual customers and add extra value on 2020 related matters at this crucial time. Pooling together information, resources and technical expertise from specialists across our entities we aim to pre-empt some of the expected challenges currently faced by our business partners.
Until the market settles at a new equilibrium and the supply side has fully completed the transition we’ll see frequent and significant price swings depending on location and availability. There are several ways to keep abreast of the latest market developments and VLSFO availability, for example by using an online resource such as the one available on our website or staying in touch with your local trader or broker who’ll be closely monitoring market movements and the current availability of various products.”
Photo credit: KPI Bridge Oil
Published: 26 November, 2019
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