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Bunker sales reveal progress in sulphur cap transition and compliance

Long-held concerns about compliance and availability appear to be abating as vessels refuel at ports ahead of the change to sulphur emission rules on January 1, 2020

Large bunkering ports are reportedly well-stocked and shifting smoothly into the new era of global sulphur rules. However, shortages of high-sulphur fuel oil have emerged in smaller ports

THERE are early indications that the transition to lower-sulphur marine fuels is progressing more smoothly than anticipated in the world’s largest bunkering ports, with reports that low-sulphur fuel oil already comprises half or more of all sales and is widely available.

However, shortages of high-sulphur fuel oil have emerged in smaller ports, with prices in Santos and Long Beach nearly double those in the world’s largest bunkering ports of Fujairah and Singapore.

There are fewer than 25 days before the 4m barrels per day market supplying more than 60,000 vessels switches to marine fuels of 0.5% sulphur or less, from today’s 3.5% level. Long-held concerns about compliance and availability appear to be abating as vessels refuel at ports ahead of the change.

“There are sporadic bottlenecks that we’re seeing at ports, but they aren’t due to supply availability, it’s more related directly to the transition,” Carlos Torres, from Bunker Holding Group, told Lloyd’s List. “This is purely a transitional process, not a fundamental shortage of supply.”

Mr Torres is the global head of physical group operations for the Denmark-based group, which operates and supplies bunkers in 31 countries.

“The availability of products is going to be sporadic and the bottlenecks will be at different points of time,” Mr Torres said. There have been some delays as barges that deliver bunkers to vessels at ports transition to new fuels and the onshore storage tanks are cleaned, he added.

“That is going to be less and less as we get into January and February,” he said. Singapore and the Amsterdam-Rotterdam-Antwerp markets already “have fully transitioned” he said.

At the port of Rotterdam, about half of all November bunker sales were for very low sulphur fuel oil, according to a port spokesman. Rotterdam is the third-largest bunkering hub after Singapore and Fujairah. Port officials tracked marine fuel purchases made on an app the port has devised for shipowners and charterers that they can download and use.

About a third of all bunker sales in Rotterdam are transacted via the app. Sales in November comprised about 100,000 tonnes for high-sulphur fuel oil and roughly the same for very low sulphur fuel oil, said Tie Schellekens, port spokesman.

That extrapolated to about 300,000 tonnes of VLSFO sales in November, with the figure expected to keep rising as December progressed, he said.

Larger numbers of vessels using sulphur abatement technology and increased confidence in untested VLSFO is smoothing the changeover, according to Mr Torres. For the past year there have been widespread concerns about the compatibility and stability of VLSFO, which cannot be safely co-mingled like HSFO, even if fuel meets all specifications.

“As refineries and trading houses became more familiar and started to test some of the blends for the 0.5% fuels confidence went up,” said Mr Torres.

“People realised that between marine gasoil and HSFO, which is low in sulphur, and the different blend streams you can find in the market, that blending to 0.5% was not going to be as challenging as people thought 18 months ago.”

He said that using cutters and blending components was successfully delivering 0.5% fuel, though he noted wide variations in viscosity in samples even though they met standards. Viscosity is a measure of fuel fluidity at a certain temperature and can lead to engine combustion issues if outside manufacturers specifications.

Some 3,000 ships worldwide will have scrubbers installed by January 1, allowing them to use the cheaper, higher sulphur fuel and remain compliant with new regulations.

However, HSFO is now priced above marine gasoil and VLSFO in the port of Long Beach, reflecting short-term supply issues.

The price of $504 per tonne for HSFO marine fuel compares with $268 per tonne at Fujairah and $248 per tonne in Rotterdam. The container port has little onshore storage making the segregation of different marine fuel products difficult. Similar high fuel costs are also seen in Santos.

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