OW Bunker: 1% Sulfur Bunkers May Be Unobtainable in H2 2014

Adrian Tolson says 1% sulfur bunkers will be an obsolete product in 2015.

Bunkers with a maximum sulfur content of 1.0 percent by weight, currently needed for vessels operating within Emission Control Areas (ECAs), may be unobtainable in the second half of 2014 because next year's stricter ECA limit of 0.10 percent will make the product obsolete, OW Bunker's Adrian Tolson, General Manager - North America, has warned.

"I have to say it's becoming a bit of an issue right now because 1% is starting to get very expensive," Tolson told delegates this month who had gathered for the Connecticut Maritime Association (CMA)'s Shipping 2014 annual conference.

"There's a reason for that and it's that nobody wants the product and nobody wants to deal with it."

"What happens in the next 6 months of this year I have no idea. It may be an unobtainable product because nobody wants an obsolete product line, so a shift to distillate may become almost a necessity before [the new ECA limit comes into force on January 1, 2015]."

"There's a lot of money to be made if you've got 1% in the last 6 months of the year I think," he added.

Bunker price data from Ship & Bunker shows that LS380 prices in New York have been trending upwards throughout 2014, rising from a low of $634 per metric tonne (pmt) on January 15 to a high of $725 pmt on March 4, but have since fallen back to Friday's price of $692.50 pmt.

Tolson said that questions remained over whether there would be a pure distillate market in 2015, or if there would be blends and hybrids of products with small amounts of residual fuel oil in it.

"A lot of discussion needs to take place between the supply community and the shipping community to see whether or not we can actually supply these hybrid products," he said.

CMA's next event, CMA Shipping 2015, will be held on March 23-25, 2015 at the Hilton Stamford Hotel, Connecticut.