Global bunker trader KPI Bridge Oil has reported that its sales of 2020-compliant fuels has exceeded the sale of high sulphur fuel oils for the first time.
The milestone comes just months ahead of new rules from the International Maritime Organization (IMO) requiring the use of bunker fuel with a sulphur limit of 0.5%, down from 3.5% currently.
According to Soren Holl, CEO of KPI Bridge Oil, the market should prepare for big swings in pricing for Very Low Sulphur Fuel Oil (VLSFO), depending on location, until the market stabalizes.
“We started fixing 0.5% sulphur contracts in flow ports at the beginning of Q2 and, as expected, the demand from business partners looking to secure availability of 2020 compliant fuels has steadily increased since,” said Holl. “In this final stage of the switch to 2020 compliant fuels we’re experiencing significant price and availability fluctuations in most ports around the world as the market adjusts. We have previously talked about an anticipated price differential of 30-40% between compliant and non-compliant fuels, depending on region and local availability and this upward drive on prices seems to be materialising.”
“Until the market settles at a new equilibrium and the supply side has fully completed the transition we’ll see frequent and significant price swings depending on location and availability,” added Holl.