Low sulfur fuel oil: demand from shipping. File image/Pixabay.
South Korean refiner S-Oil has noted the rising demand for low sulfur fuel oil from shipowners in its third quarter results.
Stockpiling low sulfur fuel oil in time for the IMO2020 change to 0.5% fuel oil will lend support to fourth quarter refining margins, the refiner was reported as saying by Reuters.
"Refining margin is expected to improve further on the back of robust demand growth in the region by 0.7 million barrels per day for seasonal pickup along with inventory build-up in preparation of IMO implementation," the report said citing a refiner statement.
"For the fourth quarter, given a drop in high sulphur fuel oil prices and a rise in gasoil cracks, it seems shipping companies are disposing high sulphur fuel oil and stockpiling IMO-compliant fuels," Cho Yong-kuk, S-Oil's treasurer, was quoted as saying in an analysts' call.
The global fleet must use IMO2020 grade fuel from the start of next year or have the necessary emissions abatement equipment onboard.