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US tipped to be big winner of new IMO shipping rules

  • Author:Alex
  • Source:Sunny worldwide logistics
  • Release Date:2018-10-17
US tipped to be big winner of new IMO shipping rules

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US tipped to be big winner of new IMO shipping rules
GENEVA-HEADQUARTERED global commodity trading company, Gunvor Group, has predicted that the US is set to be the big winner from new marine fuel rules, while rival merchants said the world would not face a shortage of distillates as a result of new rules to cut pollution.

The International Maritime Organisation (IMO) has set new rules that will ban ships from using fuels with a sulfur content above 0.5 per cent from 2020, compared with 3.5 per cent now, unless they are equipped with so-called scrubbers to clean up sulfur emissions.

The industry has been expecting a sharp rise in demand for cleaner distillates, mainly diesel, at the expense of fuel oil that would become largely redundant.

Gunvor Group chief executive Torbjorn Tornqvist said at the Oil & Money conference in London that the switch would certainly create some chaos at first as storage and logistics must deal with a "cocktail of fuel blends" and that the United States would be the major overall winner, according to TheMediTelegraph of Genoa.

"Crude differentials will reflect the strong differentials between distillates (diesel) and fuel oil and we will see the price of heavy crude fall and light sweet rise," Mr Tornqvist said.

"The big winner in the IMO is actually the United States. They have the most advanced refining system in the world and will take advantage of importing more heavy crude oil and they will export light crude oil that will get a bigger premium," he said.

Vitol chairman Ian Taylor said he did not expect a major glut of high sulfur fuel oil as refiners were adding units. "So many units have been prepared to reduce it and there's so little high sulfur fuel left already," Mr Taylor said.

Glencore's head of oil Alex Beard echoed the remarks as scrubbers, add-on units to ship to clean out pollutants, would still allow ships to mop up some fuel oil. "Distillates will clearly play a very large role in shipping but what is becoming clear is that the world can cope, so it won't be the crisis that people were thinking a year or two ago," he said.

"Our estimate is that by January 2020, something like 25 per cent of the world's high sulfur fuel demand today will be from ships that have scrubbers and that will grow through 2020."