Don’t write an obituary for shipping’s dirtiest fuel

Jun 03 08:06 2020 Print This Article

High sulfur fuel oil, once the cheap staple diet of the shipping industry, has been usurped by an abundance of low-cost, premium quality bunker fuel. That’s led to seafarers freezing orders for equipment to remove the sulfur from HSFO and maximizing compliant fuels.

But don’t write off shipping’s dirtiest fuel as companies play a waiting game over the oil price recovery.

The COVID-19 driven collapse in oil demand has led to the spread between HSFO and very low sulfur fuel narrowing to less than $40/mt in mid-April based on the Northwest Europe differential for delivered bunker fuels at the Rotterdam hub.

That compares to close to $300/mt when the International Maritime Organization rules came into effect on January 1, requiring ships to sail with 0.5% sulfur fuel oil or have the sulfur removed using an exhaust gas cleaning system, or “scrubber”.

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The Barrel

S&P Global Platts provides market insights so people can make more informed trading and business decisions.. They're the leading independent provider of information and benchmark prices for the commodities and energy markets. Customers in over 150 countries look to their expertise in news, pricing and analytics to deliver greater transparency and efficiency to markets. S&P Global Platts coverage includes oil and gas, power, petrochemicals, metals, agriculture and shipping. S&P Global Platts provides critical information for the commodities & energy markets to make physical commodity markets more transparent and efficient. S&P Global Platts blog, The Barrel, provides the essential perspective on global commodities.

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