According to an article published in the Financial Tribune, with less than a week to go before the implementation of global low sulfur regime for bunker fuels, a large number of ship owners in the race to be compliant are offloading the ineligible grades, market participants said.
Transition to LSFO
While most owners are making a transition to low sulfur bunker fuel, this has created a situation where they have to unload, or de-bunker, the grades that are not compliant from January 1 for vessels without scrubbers, S&P Global reported.
The new global mandate on using marine fuels with 0.5% sulfur will be enforced vis-a-vis the current 3.5% sulfur grade. Since thousands of ongoing voyages will spill over into January, the owners have already started using VLSFO or very low sulfur fuel oil.
Cost optimization
However, for the longer voyages of over a month, ship owners have continued to use high sulfur fuel oil, or HSFO, to optimize costs, sources said. This is because HSFO enjoys a large discount over its low sulfur counterpart.
For longer voyages such as cargoes on VLCCs from the Caribbean to North Asia, on clean tankers from South Korea to US West Coast and dry bulkers like Capesizes from Brazil to China, these loaded in early December and were moved by burning HSFO.
Large scale switch from HSFO to VLSFO
This transition is far from smooth as there are ships saddled with HSFO, which they will not be able to burn before the close of the year and cannot use from next Wednesday, a source with one of the owners said.
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Source: TheFinancialTribune
