Tainted shipping fuel sparks calls for tighter quality control
A wave of contaminated fuel that has clogged and damaged engines on hundreds of oil tankers and container vessels in the past months has pushed shippers to demand stricter quality controls around the world. The calls are shining a light on the notoriously opaque shipping fuel sector, where any contamination can spread quickly and be difficult to trace back to its source. That is because large volumes of fuel oil are blended with so-called cutter stocks by suppliers and sold on through an extensive network of middlemen before finding their way into ships’ fuel tanks.
This tide of dirty fuel comes when the shipping industry, the backbone of global commerce with over 90 percent of the world’s traded goods transported on the oceans, is bracing for an unprecedented shift to lower-sulfur fuel from 2020.
‘A third of total bunkers in 2025 may be high sulfur fuel oil being scrubbed’
A third of the total bunkers in 2025 could be high sulfur fuel oil being scrubbed, compared to an estimate of about 8 percent in 2020, as the uptake of exhaust gas cleaning systems, also known as scrubbers, accelerates after the implementation of the International Maritime Organization’s 2020 rule, Robin Meech, managing director at Marine and Energy Consulting Limited quoted as saying last week.
The IMO rule will cap the sulfur limit in marine fuels to 0.5 percent worldwide from January 1, 2020, from 3.5 percent currently. This applies outside designated emission control areas where the limit is already 0.1 percent.
Shipowners will have to either switch to using cleaner, more expensive fuels or install scrubbers. A lot of other shipping companies are also mulling over scrubbers. In August, Hong Kong’s Pacific Basin Shipping, for example, said it was assessing two main methods — low sulfur compliant fuel oil versus scrubbers — as it geared up for the IMO 2020 rule. The shipping company had said earlier that it did not think that scrubbers were an effective solution either technically or environmentally.
Platts JKM for LNG cargoes will be eased
The Platts JKM for LNG cargoes to be delivered in October was assessed at $11.75/MMBtu, dipping 4.35 cents/MMBtu from last Friday, as the market took a breather after recent gains, and autumn shoulder month weakness started to emerge.
Sources said the market may be peaking with oil-slope equivalent levels at seasonal highs of around 15 percent and end-users held back to re-evaluate future prices. Trade activity was thin, with no firm bids or offers submitted during the Platts Market on Close assessment process. Others, however, added that expectations for further demand for winter cargoes continued to underpin the firmness in the market. Demand from end-users appeared limited except for one South Korean buyer, who was heard to be sounding out the market for winter volume, although it was not clear how firm their requirements were. In addition, an Australian producer was heard possibly seeking one November and one December delivery but details remain unclear.
India’s coal import rises to 79m tonnes in April-July
India’s coal import rose 11.9 per cent to 78.7 million tonnes in the first four months of the current fiscal. The country had imported 70.3 million tonnes coal in April-July period of the last fiscal. The country’s coal import in July increased by 42 percent to 20.79 million tonnes (provisional), over 14.64 million tonnes (revised) in the same month previous year.
Coal import (all types of coal) in July 2018 stood at 20.79 million tonnes (provisional), higher than 18.75 million tonnes (revised) in June 2018 and also higher than 14.64 million tonnes (revised) in July 2017, mjunction services quoted as saying last week. The increase in coal and coke imports in July is mainly due to a 12.9 percent growth (month-on-month) in non-coking coal shipments, it said.
Container shipping market going through hard phase needs improvement
When judged by global volume, demand growth alone – 3.8 percent for the first six months– is not that bad. It’s just that the nominal fleet grew by 3.9 percent during the same period, and the active fleet even more. The trend points towards lower demand growth this year, as global volume demand has fallen since April. It goes for all shipping sectors that tonnes-miles demand is measured by the volumes multiplied by the sailing distance. This gives a bit of insight into why container shipping is facing headwinds at the moment; 83 percent of the new builds delivered in 2018 are ships with a capacity of 10,000+ TEU. They were made for long sailing distances. This compares to 37 percent of the volume growth being short-distance, intra-regional trades (for example, intra-Asia or intra-Europe).
The positive economic development in Europe is mirrored by imported volumes, this year in particular. Inbound volumes into Europe are up 4.1% (+646,000 TEU). But the ‘problem’ is that imports are growing on secondary, middle-distance trades from North America, the Indian subcontinent and the Middle East, and South and Central America to other countries – trades that are currently serviced mostly by ships below 10,000 TEU.