EMEA News
MGO Demand Up in NW Europe as ECA Rule Change Looms
Demand for marine gasoil (MGO) is increasing in Northwest Europe as the sulfur cap in Emissions Control Areas (ECAs) is set to tighten on January 1, Platts reports.
"We have seen an increase in demand for MGO since early October," said one trader at major bunkering port Rotterdam.
"Volumes are going right up to 1,000 mt [metric tonnes] now," said another, adding "we didn't really have inquiries for that sort of volume before."
Another MGO trader commented that refiners have been waiting for demand to increase before producing more of the cleaner distillate fuel MGO, also known as DMA.
"Refineries have not yet started to produce more DMA, they're waiting for demand to pick up," said the trader, adding that refiners could easily produce DMA at the expense of diesel.
Allowable levels of sulfur will reduce from 1.0 percent by weight to 0.10 percent on January 1, 2015, for ECAs in place covering U.S. and Canadian waters as well as the Baltic and North Seas in Europe.
There have also been reports that barge operators are preparing for a change in demand from 1 percent Low Sulfur Fuel Oil (LSFO) to MGO.
"LSFO demand is falling...some barge operators have started clearing their barges to transport MGO/DMA instead of LSFO," said a trader in Hamburg.
The International Energy Agency this month forecast 50 percent demand growth for MGO in Europe, while predicting it would take the largest share of the U.S. market.
