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IMO 2020

Wait and see? Don’t risk inaction over IMO2020 fuel price, says FIS

‘Wait and see’ community at risk of being blindsided by current low physical quotes for compliant VLSFO.

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The following article has been written by Chris Hudson, Fuel Oil Futures broker, Freight Investor Services, and shared with Manifold Times:

It is said that the only certain things in life are death and taxes. This is certainly the attitude the shipping industry should take towards the impending IMO2020 sulphur cap.

From the myriad reports, conferences, and press releases on this issue, with just nine months left to go it’s fair to conclude that the market is still unsure of how to prepare financially for the changes.

The first indications (in the middle of 2018) for the new 0.5% Sulphur Fuel Oil (VLSFO) had put the differential with High Sulphur marine Fuel Oil (HSFO) around $250, with some estimates putting it closer to $350.

The initial predictions of large cost hikes had naturally pushed shipowners to take advantage of the prospect of lower cost of HSFO with sulphur scrubbers. This would allow them to run on cheaper fuel and avoid the uncertainty surrounding the creation of a new global grade of marine fuel oil.

Those taking the ‘wait and see’ approach have been comforted by Platts’ publishing its physical index, pricing 0.5% Rotterdam and 0.5% Singapore levels at a premium to HSFO of as little as $30-50/tonne.

The year to date index averages for physical 0.5% Marine Fuel Oil were FOB Sing $433.76, Fob Fujairah $424.18, FOB USGC $426.57, Dlvd USAC $447.93 and FOB Rotterdam $413.06.

The problem with the wait and see approach – as well as the business as usual scenario – is that it assumes the refinery and bunker supply industries can cope with such a seismic change without problems, and that a changing global oil market will quite quickly be able to provide the exact crudes needed to supply the needs of the shipping industry.

The market is pricing the difference between the HSFO and VLSFO at around $185-200, yet these diff values can change like the wind and are current prices for future dates, so are not necessarily good predictions.

Scrubber users are banking on there being as large as possible difference between the current HSFO and the new VLSFO to justify their capital outlay for scrubber retrofits and newbuilds.

Yet relying on the market to price a large differential and keep that consistent does not take into account the falling supply of heavy crudes and the shift in supplies to accommodate the new fuel grade. This has pushed up premiums for heavier products, eating away at the potential benefits of a scrubber-fitted ship.

For the ‘wait and see’ community, the risk is being blindsided by the currently low physical quotes for compliant VLSFO. The index may seem surprisingly low compared to the wild predictions last year, however the physical market has seen only a tiny number of trades reported.

This means the index is in fact pricing something that has no current demand, on a grade of fuel that has no international standard. This explains the huge disparity that currently exists between the physical index prints and futures pricing for 2020.

The initial 0.5% Marine Fuel futures trade, brokered by the FIS Fuel Oil desk last month was concluded at a $200 differential to HSFO and since then the market has narrowed to around the $185-190 level.

The gap between the physical and derivatives markets will close as we draw closer to January 1, 2020, and the current forward curve suggests that activity on both physical and futures could pick up quickly once more prices are published and more futures trades are concluded.

The factor that will be thrown into the mix once we get to 2020 and implementation day is the problem of physical supply. Getting a new product produced, stored, distributed and loaded for the majority of the world fleet is a colossal challenge. There will be shortages, premiums paid to make sure products are available and suppliers will look to capitalise. Any disruptions of this sort will mean exposure to upwards price risk.

End users and suppliers will need to establish where their fuel P&L sits and adjust their risk management accordingly. Those using scrubbers can use derivatives to cover any narrowing of the HSFO vs VLSFO by selling that spread. For those intending to use IMO compliant fuel, there is the opportunity to hedge using the 0.5% and gasoil derivatives to provide clarity on costs for the changeover.

End users are caught between a rock and a hard place; knowing which fuel to use and where it will price in 2020. It’s never good advice to try and catch a falling knife. Better to grab hold of the rope and look at how hedging can help rather than sitting still and hoping for the best.

Published: 19 March, 2019
 

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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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