Seatrade Maritime is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Live From SMME 2016

Industry warned of $200 per tonne bunker price hike due to new IMO 0.5% sulphur cap

Industry warned of $200 per tonne bunker price hike due to new IMO 0.5% sulphur cap
Bunker prices could jump by more than $200 a tonne “overnight” when the new IMO 0.5% sulphur cap comes into force in 2020, but the new regulation is not all gloom for the tanker sector.

That was the message from analyst Stavroula Betsakou to Tuesday’s Seatrade Tanker Middle East forum on the second day of the 8th Seatrade Maritime Middle East conference and exhibition in Dubai.

Betsakou, head of tanker research at Howe Robinson Partners, said regardless of what type of fuel refiners eventually settle on to meet the new emission requirements, it will be more expensive than current bunker prices.

“There is likely going to be a different blend in Singapore and the Middle East gulf and the compatibility of the two is a question to be answered. But in terms of the price, we could be looking at an extra $200 a tonne, or even more, overnight,” she said.

This would equate to around a 70% increase on the current bunker price of around $280 per tonne.

The new bunker fuel is likely to be blended by a limited number of refineries which would create opportunities for owners, Betsakou said.
“There’s lots of implementation elements that still need to be decided and some of them relate to exemptions, maybe the IMO will grant exemptions when you can’t find the right quality, a compliant fuel when and where you need it. 

“That could be quite a broad exemption which could delay real compliance and real impact [of stricter emissions] but overall the regional discrepancies that have been mentioned, on the face of them, it is good for tankers.

“Whether you are going to be moving the diesel around the world, that’s going to increase your demand for product tankers, if it’s a fuel blend then it is your crude tankers that will get involved. So on the face of it you are just going to be using tankers to correct those regional imbalances 

Betsakou believes the higher bunker prices might not be faced solely by tanker owners as traditional hikes have, but also shared with charterers.

“The IMO 2020 is the first time that the bunkers cost is going to go up without oil prices being up, it’s just a quality premium rather than an oil price related premium. Assuming we don’t massively overbuilt the market, which I don’t think we will, then there is a much better basis for that extra cost to be shared [by ship owners and charterers].

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.