IMO 2020: Multiple Compliance Options Limited First-Mover Advantage

by Ship & Bunker News Team
Friday March 29, 2019

Allowing multiple compliance options for IMO 2020 compliance has limited any first-mover advantage and prolonged the period of uncertainty for industry stakeholders, Poten & Partners say.

There is now just nine months to go before the global 0.50% sulfur cap comes into force, but the energy and ship brokerage notes there are still many uncertainties around fuel availability, product specifications, and compliance.

"For most regulatory changes the optimal solutions are typically becoming clearer as the deadline is nearing. IMO 2020 does not (yet) appear to be conforming to that rule," Poten & Partners write in their latest Tanker Opinion.

While the situation has made it difficult to predict the impact on product flows, the firm sees the change as being positive for tankers.

"In the early days and months of the changes, as the distribution channels for the new fuels are still being set up, we expect significant logistical challenges and dislocations in the market. Some areas will be long compliant fuels, while others will be short," it says.

"Many ports will need to import compliant fuels and there will be some stockpiling in advance of the deadline."

Several traders and owners have also geared up to use tankers as floating storage, be that to ensure they have sufficient supply of complaint product or to take advantage of an expected spike in prices.

"We expect that the combination of these factors will lead to significant additional demand for product tankers (both for trading and floating storage)," Poten & Partners concludes.