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Singapore Nov marine fuel sales hit 8-month high; low-sulphur soars to record
SALES of low sulphur marine fuel in the Singapore bunkering hub soared to a record high in November, more than double the previous record, as the shipping industry transitions to cleaner marine fuels ahead of the IMO 2020 global sulphur cap.
Total sales of low sulphur marine fuels came in at 2.076 million tonnes in November, well above the previous record of 915,000 tonnes set in October and more than the 1.871 million tonnes sold in 2018, data from the Maritime and Port Authority of Singapore (MPA) showed on Friday.
For the first time, sales of low sulphur marine fuels represented more than half of Singapore's overall bunker fuel sales volumes, Reuters calculations showed.
Overall, Singapore marine fuel sales hit an eight-month high in November totalling 4.076 million tonnes, up 4 per cent from last year and 8 per cent higher than October, the data showed.
New International Maritime Organisation (IMO) rules, referred to as IMO 2020, aim to stop ships from using fuels containing more than 0.5 per cent sulphur unless they are equipped with exhaust-cleaning systems known as "scrubbers".
Signs are already emerging of disruption from the IMO 2020 fuel regulations - some of the most significant to hit the shipping and oil refining industries in decades.
Logistical issues down to a lack of barges prepared to deliver very low sulphur fuel oil (VLSFO), the usually cheaper and preferred IMO-compliant alternative compared to marine gasoil (MGO), have caused loading delays at some of the world's top bunkering hubs including Singapore. The tight barge VLSFO availability has also caused the VLSFO-MGO price spread to narrow significantly for prompt fuel deliveries, and in some cases prompt VLSFO deliveries traded at a premium to MGO, according to six Singapore-based fuel oil and bunker traders.
"Delivered MGO is now often significantly cheaper than VLSFO," said one of the traders referring to prompt deliveries.
Trade sources currently estimate that VLSFO makes up about 75 per cent of marine fuels sold in the Singapore hub. MGO was estimated at 20 per cent and high-sulphur fuel oil makes up the rest.
With only a minority of ships in the global fleet having installed scrubbers, the oil industry had feared refiners would not be able to make enough diesel and VLSFO.
With an estimated 7 million to 8 million tonnes of VLSFO and its components currently stored on board storage tankers around Singapore after months of stockpiling, supply is not yet an issue, the trade sources said.
But as VLSFO demand ramps up and draws on available stockpiles, supplies of the residual fuel will tighten, leaving MGO to fill in the shortfall, the sources said.
"I am not seeing a shortage of VLSFO at the current stage but I am worried about later in 2020 that supply can't cover the demand," said one of the traders. REUTERS