EMEA News
Higher Demand for RMK Grade Bunkers Predicted
Demand for RMK fuel oil, which is more viscous than RMG oil, is likely to rise in 2015 as new sulfur limits in Emissions Control Areas (ECAs) lead to changes in blending practices, Platts reports.
Traders said the fact that RMK is usually denser and more viscous means it requires less cutterstocks and is cheaper to blend.
"To make a gasoil, a DMA, you need a basic distillate and to blend it down and you need cutterstocks for that," one trader said.
"The same sort of cutterstocks are used for RMG and RMK, so when cutterstocks are added to a higher cost product there is a higher gain for them.
"So, we think that more [cutterstocks] will reach the DMA pool and less to RMG; buying cutterstocks will be a more expensive hobby."
Traders said the European market for high-sulfur bunker fuel is split about evenly between RMG and RMK, but the demand for RMK, and thus its price, is likely to rise as more of it is redirected toward the blending of low-sulfur fuel.
RMK differentials are typically cheaper than RMG, but the discount has narrowed from $16-$18 per metric tonne (pmt) down to $8-$12 pmt in recent months.
Also contributing to the shift is the fact that modern vessel engines are more capable than older models of running on RMK, traders said.
UK MGO supplier the Geos Group recently predicted a shortage of marine gas oil (MGO) as the new low-sulfur requirements take effect next year and noted that additional blending is one alternative.
