The shipping industry faces a hike in costs and operational headaches as a result of IMO 2020 regulations that will cap the sulfur content of marine fuels. At the same time, new streams of product demand will be created, potentially benefiting some shipowners. The International Maritime Organization’s agreed limit of 0.5% sulfur content for marine fuel will come into effect next January 1 and its ramifications will span the shipping, bunkering, petroleum products and petrochemicals markets. While bunker costs are expected to go up and prices to increase in volatility, higher demand for low sulfur fuel oil (LSFO) and Marine Gasoil (MGO) will impact demand and supply of products ranging from gasoline to naphtha as well as gasoil and diesel. Go deeper – Read S&P Global Platts’ special report on the future of fuel oil after IMO 2020 The new regulations could present an opportunity for the clean tanker market, as demand to move middle distillates and light ends into and between bunkering ports and refineries is expected to positively impact demand. This would in turn lead to higher freight rates for clean tankers, and higher revenue for shipowners, counteracting increased fuel costs. But in order to profit from the… continue reading
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Source: CTRM Center