0.5% Global Sulfur Cap Will Benefit Well Capitalised Bunker Suppliers: Aegean

Aegean President E. Nikolas Tavlarios says The new cap "will have a positive impact on our business."

There will be winners and losers when the 0.50 percent global sulfur cap is introduced in 2020, according to Aegean Marine Petroleum Network Inc. [NYSE: ANW] (Aegean), who sees itself as benefitting from the tightening regulations.

"While this cap does not go into effect until 2020, Aegean supports the implementation of the new regulation which will have a positive impact on our business," Aegean President E. Nikolas Tavlarios said during the company's recent earnings call for 3Q 2016.

"Our amount of tonnage, flexible infrastructure, and team of global specialists ensure that Aegean will continue to successfully navigate the ever-changing marketplace."

In fact, Tavlarios says the cap should be a benefit to all well-capitalised marine fuel suppliers "capable of segregating qualities and sourcing and blending component cargoes to meet the strict requirements."

With the cost of compliant fuel anticipated to be much higher than the 380 cSt product most vessels burn today (Ship & Bunker data indicates the premium for MGO over IFO380 in the primary ports is currently around 75 percent / $200/mt) another group of winners identified by Tavlarios are those using eco-tonnage and their owners, who burn less bunkers per mile.

The increased cost of bunkers will also the a challenge for some bunker suppliers, Tavlarios notes, particularly the smaller suppliers who lack the liquidity to finance more expensive inventory.

As Ship & Bunker previously reported, the three months ended September 30, 2016, was another positive one for the bunker supplier, with sales volume for the period jumping 25.8 percent year-over-year to 4,258,95 mt.