IMO2020: Distillate Demand Spike Will Be Short Lived, Says IEA

by Ship & Bunker News Team
Monday March 5, 2018

Conventional thinking to date has been that the majority of vessels will to switch to compliant distillate fuels when the global 0.50% sulfur cap on bunkers comes into force on January 1, 2020, but the International Energy Agency (IEA) now predicts the demand spike for such fuels will be short lived.

Writing in its five-year outlook released today, IEA predicts MGO demand in 2020 to jump 1 million bpd to 1.7 million bpd before falling back to 773,000 bpd by 2023.

"After a strong increase in 2020, marine gasoil demand will return to its 2019 levels by the end of the forecast," the IEA said.

But the fallback will not be a result of shipowners choosing to install scrubbers or switching to alternatives such as liquefied natural gas (LNG), but rather the result of bunker buyers choosing to burn a range of new 0.50% maximum sulfur blends that will emerge onto the market.

The popularity of such products will grow in step with operators' confidence in their quality, IEA adds.

Demand for HSFO bunkers, which IEA expects to drop some 60% to 1.3 million bpd in 2020, will not recover, it says.

The IEA is not alone in challenging the previously widely held view that the post 2020 bunker market will be dominated by distillate fuels.

ExxonMobil's marine marketing manager, Iain White, last month declared: "It will not be a distillate world going forward, as some have said."

Ship & Bunker News Team
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