‘Relatively Smooth Transition to New Sulfur Caps’: IMO

IMO transition“The IMO says information from various sources has indicated a relatively smooth transition to the 0.5 percent sulfur cap for bunker fuel.

“Prices for compliant fuels, very-low sulfur fuel oil (VLSFO) and marine gas oil (MGO), rose quickly initially but now appear to be stabilizing. As of January 20, 10 cases of compliant fuel being unavailable had been reported in IMO’s Global Integrated Shipping Information System (GISIS), and the dedicated email address established by the IMO Secretariat (imo2020@imo.org) has not received any specific correspondence reporting issues with implementation”, states a 1/21/2020 article pubished in Maritime Executive.

“Since January 1, 2020, the global upper limit on the sulfur content of ships’ fuel oil has been reduced to 0.5 percent from 3.5 percent (under the so-called “IMO 2020” regulation). This is significantly reducing the amount of sulfur oxide from ships and is expected to have major health and environmental benefits, particularly for people living close to ports and coasts.

“IMO Secretary-General Kitack Lim said: “I believe it is testimony to the diligence and dedication of IMO, its Member States, the shipping industry, the fuel supply industry and other relevant industries that such a major rule change is being implemented successfully without significant disruption to maritime transport and those that depend on it.”

“The next important date for shipping is when carrying non-compliant fuel oil on board ships becomes prohibited on March 1, 2020. “I urge all shipowners, operators and masters to comply with the carriage ban, where applicable, when it comes into effect,” says Lim. “IMO will remain vigilant and ready to respond and provide any support.”


“However, the spread between the compliant fuels and the HFO, which is currently getting cheaper, has peaked from $280/mt up to more than $400/mt in some major bunkering ports, and the fact is that most owners are experiencing high and uncertain heavy fuel oil price levels. So this is good news for those owners who rushed to install scrubbers.”

Alan Gelder, vice president, refining and chemicals, says that a number of forecasts around IMO implementation appear robust, notably:

• Compliant low-sulfur fuels will be costly, so priced at a premium to crude oils such as Brent;
• the installation of scrubbers on ships will be economically attractive as there will be a wide pricing spread between low-sulfur compliant fuels and high-sulfur fuel oil;
• crude differentials will change, with very low sulfur crudes attracting a significant premium to global markets, such as Brent.

Full article at Maritime Executive