World News
IMO2020: Boost for LSFO as Blendstock
- CORRECTION: A previous version of this story made incorrect references to 0.1% LSFO instead of 1.0% LSFO.
Demand for fuel oil with 1.0% sulfur content can expect a boost from the coming International Maritime Organisation sulfur rule in force from 2020.
Under the rule, fuel oil used by ships will be capped at 0.5%; but players expect demand for 1.0% sulfur material to sharpen as its attractiveness as blending stock will increase.
The changing IMO2020 demand picture would see 1.3 million barrels a day (b/d) of 1.0% LSFO demand and 2 million b/d of distillates demand created, according to S&P Global Platts. At the same time, some 3 million b/d of HSFO demand will disappear.
However, the extent to which 1.0% LSFO oil will make its way into the bunker pot remains to be seen
"Some 1% will definitely make way to the 0.5% blends," a fuel oil trader was quoted as saying. That demand will hinge on whether or not the blended bunker grades are sufficiently stable.
As the LSFO market is currently over supplied, any demand increase is unlikely to emerge until half way through next year.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 647.50 | 1.00 | 770.00 | 3.50 |
| Rotterdam | 601.50 | 2.50 | 754.00 | 2.00 |
| Houston | 619.00 | 11.50 | 795.50 | 3.00 |
| Fujairah | 651.50 | 1.00 | 895.00 | 2.00 |
| Global 20 Ports Average | 664.00 | 1.50 | 856.50 | 2.00 |
| Global 4 Ports Average | 630.00 | 3.00 | 803.50 | 2.50 |
| Global Average Bunker Price | 718.00 | 0.50 | 914.50 | 0.50 |
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