Low-sulphur fuels now largest volume for marine buyers

Low-sulphur marine fuel sales have now outpaced high-sulphur marine fuel sales in Europe's main bunkering hub and many other locations globally.

With the International Maritime Organisation's (IMO) 0.5pc sulphur cap coming into force in just over a month, marine fuel suppliers in the Amsterdam-Rotterdam-Antwerp (ARA) hub are selling more 0.5pc sulphur marine fuel oil (0.5pc fuel oil) and 0.1pc sulphur marine gasoil (MGO) than marine high-sulphur fuel oil (HSFO) for the first time.

Supplies of HSFO are falling in size, while 0.5pc fuel oil ones are getting larger. A supplier in ARA now supplies mostly 100-200t clips of HSFO, as shipowners are just topping up their ships' tanks with enough fuel to reach their next destinations, before the sulphur cap enters into force on 1 January.

The picture is repeated in other regions. A global shipowner expects 0.5pc fuel oil to account for 65pc of its total marine fuel oil purchases in November.

A global marine fuel broker sold similar volumes of 0.5pc fuel oil and HSFO last week. This week, 0.5pc fuel oil took over as the best-selling marine fuel oil as HSFO demand is "rapidly reducing", according to the broker. By also including low-sulphur MGO, the broker's low-sulphur marine fuel sales clearly outweigh that of HSFO.

The broker received two enquiries for less than 100t of HSFO today — significantly less than the typical 300-2,500t volumes supplied before shipowners started topping up rather than filling their ships' tanks. It also received two enquiries for more than 1,000t today, but these are getting rarer and the broker expects HSFO demand to come down further by the end of the week.

As HSFO production has tapered off in northwest Europe, marine HSFO supply has become limited in ARA and has led to congestion at loading terminals and 2-4 day waiting times to bunker.

Another broker, KPI Bridge Oil, is also selling more low-sulphur than high-sulphur marine fuel now, and said its forecast of a 30-40pc price premium of low-sulphur over high-sulphur marine fuels is becoming visible in some regions.

In the world's biggest bunkering port Singapore, MGO and 0.5pc fuel oil were 47pc and 42pc more expensive than HS380 on 22 November. These low to high-sulphur fuel premiums were even wider in other global bunkering hubs such as Fujairah with 64pc and 44pc, Rotterdam with 56pc and 45pc, and Gibraltar with 51pc and 39pc, respectively.

By Erik Hoffmann

source: Argus Media