Market is Mispricing Both HSFO and LSFO

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Norway based pharmaceutical company Vistin Pharma has set its sights on big trading opportunities ahead of new stricter shipping fuel regulations in 2020 and plans to set up two new funds by the end of the year.

2020 regulations

As the deadline for International Maritime Organisation’s (IMO) new regulations is nearing, shipping firms are increasingly opting for fuel oil with a sulfur content at 0.5 percent, down from 3.5 percent now or invest in cleaning systems also known as scrubbers on their vessels.

Oil analyst Torbjoern Kjus said, “We believe the market is mispricing both residual fuel oil (high sulfur fuel oil) and & gasoil (low sulfur fuel oil). Nearly 30,000 scrubbers have to be installed in the next 16 months (if shipping firms should comply with new IMO rules) if not, there should be a problem for the refineries. Of course it will not happen, we might reach 2,000 scrubbers”.

Investment opportunities

The pharmaceutical company was established in March this year through a private placement of 300 million Norwegian crowns ($36.5 million) in Vistin Pharma.

The firm announced, “Part of Vistin Pharma’s strategy is to invest in asymmetrical investment opportunities caused by fundamental changes in the oil space. We will probably set up two funds before the year-end, we can’t give the size yet”.

Fuel oil prices set to rise

The company is hopeful that the price of low sulfur fuel oil will rise due to higher demand to comply with new rules and constraints at refineries. This in turn will lead to prices of jet fuel for airlines setting forth a domino effect.

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Source: Reuters

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