IMO2020: Conflicts and the Quest for Information

by Paul Hardy, NSI
Wednesday April 10, 2019

I wrote last year about how specialization within a number of large trading companies had resulted in the de-skilling of the work force and the implications it had for the future efficacy of large traders to navigate the market for IMO2020.

We have seen over the last weeks some of these predictions surface as reality. There seems to be a conflict brewing between supply side arms and customer arms in some of the industries largest traders.

The problem is simple. On a HSFO spot market where the market is transparent and volumes are steady managing supply is straight forward. On entering a multi-tiered market it becomes a whole lot more difficult. The supply side must now evaluate:

  • Specific product volumes in individual ports
  • Benchmark new products against markets with no liquidity
  • Plan logistics in the face of unknown demand

This puts the pressure on the customer arms to find out the necessary info. The problem now is customers are asking the same questions:

  • Where is the product available?
  • What is the specification?
  • What are the pricing formulas?
  • What are the logistical issues?
  • What are the refineries plans?
  • How is the forward market structured and how will this effect refineries/barging companies' plans?

Of course, these questions are very difficult to answer if you are not speaking with the suppliers direct. What has become apparent is that many buyers are becoming disillusioned with this 'wait and see' attitude of some trading houses.

I believe there will shortly be a realization that some are behind the curve. In my article from 2017 I wrote that large trading houses could still thrive through the aggregation of volume.

It seems that for some they stood still and imagined the volume would appear as if by magic.

So what have NSI done to help navigate this problem?

9 months ago we launched and we now have over 300 users. Those users receive regular weekly newsletters detailing changes in the market as we see them as well as the map of suppliers' plans for IMO2020.

Recently, we hired Richard Vincent to work full time gathering and analyzing data and compiling reports to help our owners navigate suppliers' plans and product/logistical splits.

Today we have launched a COQ upload facility which will allow the sharing of specs for the 'new fuels' between users within a secure and anonymous environment. Each upload will be vetted before being placed live on the site by NSI. It is the only global resource currently available which maps suppliers' plans and promotes collaboration within the market in the run up to IMO2020. What's more access is free for NSI clients.

Our aim is simple 'to make the opaque transparent'. We have a plan and have invested the necessary resource to implement it effectively.