What Do We Already Know About Bunker Prices and the Likely Winners and Losers in a Post 2020 World?

Tolson says the case for scrubbers never looked so good. File Image / Pixabay / Ship & Bunker

As the industry contemplates how it will comply with the upcoming global 0.50% sulfur cap on marine fuel, 20|20 Marine Energy's Adrian Tolson says current fuel oil futures' prices make a compelling case for adopting scrubbers.

"For calendar year 2020, fuel oil futures in Rotterdam are under $260/mt and under $270/mt in Singapore. To be frank, the case for scrubbers never looked so good but may still be overlooked by the cautious shipowner," he says.

For those choosing the distillate or ULSFO route to compliance, there will be major differences between global ports, and even within those ports, between the relative competitiveness of both distillates, fuel oil and any ULSFO blends.  Where a vessel trades pre-2020 is a critical part of the bunker decision-making process, post-2020 this becomes even more complex. 

For example, in the Pacific Northwest ports like Vancouver and Seattle have their MGO (distillate) pricing controlled by the much larger and relatively highly priced domestic west coast North America diesel market, whereas their IFO prices (fuel oil) prices tend to be MOPS based.

"This results in high volumes of low priced IFO being sold in competition with Asian ports, whereas we see low volumes of MGO sold in Vancouver and Seattle because prices are in excess of $100/mt over key Asian ports" says Tolson.

"In a post-2020 distillate world we can't expect the Pacific Northwest bunker volumes to keep pace with pre-2020 volumes."

In this regard, the Caribbean should be a particularly interesting market for IMO2020.

"The region is a key storage hub, which means product availability for diesel, fuel oil and the blend components of ULSFO will be good. This should make some supply locations very competitive for products post 2020," he says. 

"Having said this, the Caribbean is of course made up of lots of individual islands which means it will be one of the more complex markets from a logistical perspective."

Tolson will be exploring the implications of what IMO2020 means on a both a global scale and for Caribbean markets in particular at the upcoming IBIA Caribbean Bunker Conference being held in Jamaica April 17-19.

For more information on this event please click here: https://shipandbunker.com/events/icbc