IMO 2020 And The Covid-19 Curse

The COVID-19 outbreak has shaken and stirred the already volatile bunker market. While the refiners adjust their capacities and shipping lines choose their path to compliance, the market dynamics are yet to reach an equilibrium

Few months back towards the end of the year 2019, the maritime industry was abuzz planning to comply with the IMO 2020 emission norms. Shipping lines were busy choosing among scrubbers and different fuel blends, shippers had kept their fingers crossed to calculate the additional fuel surcharge cost that they would have to shell out and the bunker suppliers were busy gearing up their production operations to meet the sudden surge in demand for low sulphur fuel. The shipping industry consumes about 4 million barrels per day (bpd) of marine bunker fuels and the rule changes impacted more than 50,000 merchant ships globally, opening a significant new market for fuel producers. India’s marine fuel demand is estimated at about 1.7 million tonnes per year, largely supplied by State-owned companies. Out of this, some 0.965 mmtpa is high sulphur furnace oil, while the rest is distillate fuel. At the start of 2019, low sulphur fuel sales accounted for just 8 per cent of total sales compared with a jump to 70 per cent in December.

“Majorly all global bunkering ports are keeping the maritime industry fuelled with IMO 2020 compliant low sulphur fuel oil (LSFO). Out of 34 major bunkering hub ports, only Sydney in Australia is not yet servicing the request of LSFO,” opines Capt Vivek S Anand, Director, NYK Line (India) Pvt. Ltd. “Usually the preferable bunkering port is where there is minimum diversion in trading route with competitive prices. However, preferred bunkering port is Singapore because of its strategic location and price of $290 or Fujairah with a price ranging around $280. India is well equipped to supply IMO 2020 compliant low sulphur fuel oil (LSFO) with 0.5 per cent sulphur as marine fuel at all Indian major trading Ports.”