BIMCO: Low-Sulfur Fuel Sales Rise as Shipping Industry Responds to IMO 2020

The final quarter of 2019 marked a massive decline of high-sulfur fuel oil (HSFO) sales as the industry transitioned into compliance with the IMO 2020 sulphur cap, according to international shipping association BIMCO.
BIMCO: Low-Sulfur Fuel Sales Rise as Shipping Industry Responds to IMO 2020

In Singapore, the world’s largest bunkering hub, the bunker sale landscape saw significant change as the sale of HSFO dropped in a matter of months. In contrast, the sale of low-sulfur fuels skyrocketed in the final quarter.

The first wave of IMO2020 preliminary estimates from the Maritime and Port Authority of Singapore (MPA) indicates that a total of 4,465 thousand tons were sold in December 2019, a 4% increase compared to December 2018 and the highest sale of bunker fuel sold in Singapore since January 2018

Sales of low-sulfur fuels, including LSFO and MGO LS, rose by 51% month-on-month in December to 3,127 thousand tons, compared to the 1,271 thousand tons of HSFO sold in the same month.

“The shipping industry has been riddled with market uncertainty in recent months but the bunker sales in the port of Singapore provide one of the first readings as to how the industry has transitioned into compliance with the IMO2020 regulation,” Peter Sand, BIMCO’s Chief Shipping Analyst, commented.

“We have now surpassed the first wave of IMO2020 and hopefully the accompanying market uncertainty will diminish as we proceed into 2020.”

The shift in bunker sales

In December, a total of 2,630 thousand tons of LSFO were sold, accounting for 59% of total sales. This is a massive change considering that it accounted for roughly 1% of total sales in the last 2 couple of years.

However, the total 2019 bunker sales in Singapore were down 4% year-on-year, the lowest level since 2015.

The December figures provide insight into the IMO2020 transition and how the upcoming year might unfold. At the start of 2019, low-sulfur fuels accounted for a mere 8% of total sales compared with a jump to 70% in December.

“The massive uptick in market share of low-sulphur fuels illustrate the first wave of IMO2020, but BIMCO does not necessarily expect the low-sulphur to high-sulphur sales ratio to remain at these levels in the coming year,” the association added.

While low-sulfur fuels have gained the largest market share, it is worth noticing how HSFO still accounts for 28% of total sales, driven by bunkers purchased for scrubber-fitted ships. Many of the scrubber-fitted ships are also the largest types of ships consuming relatively more fuel, which will surely facilitate stable demand for HSFO.

The bunker market in the port of Rotterdam, approximately one-sixth of the size of the Singaporean market, exhibited the same trend in November. Here, the sale of HSFO declined substantially while low-sulfur fuels rose to 50% of total bunker sales.

The shift in bunker sales underlines the massive transition that the shipping industry has been faced with at the turn of the decade. For the first wave of the transition, the global fleet seems to have bunkered sufficiently. A second wave is expected to set into motion once the fleet has burned through the initial supply of low-sulfur fuels.

Feb 18, 2020 22:11
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