SUBSCRIBER NOTE: Platts clarifies CN standards for European LSFO

Effective July 10, 2017, Platts has clarified that its European LSFO assessments reflect material that has been assigned European Combined Nomenclature (CN) code 2710 1964. As a result, in all instances where a seller intends to deliver a fuel with a CN code other than 2710 1964, Platts asks that the seller specifies this CN code in the terms of any offer provided for publication.

This follows a decision published on July 7, 2017: https://platts.com/subscriber-notes-details/21261184.

Platts European LSFO assessments did not previously specify a standard CN code. Buyers and sellers providing data for Platts to publish during the MOC process were expected to fulfill resulting transactions with fuel meeting specification requirements, with no expectation defined for a specific CN code.

CN codes, which Platts understands are designated by and subject to the approval of customs authorities within each EU member country, are an important component of settling tariffs and taxes within the EU.

Platts understands that LSFO of the identical specification may be classified using either of two, existing Combined Nomenclature (CN) codes, and that choice of code may vary between customs authorities in Europe.

Market participants highlighted that while the fuels may be otherwise identical, the attachment of a specific CN label may significantly influence merchantability within Europe and the Mediterranean.

Feedback showed that a significant proportion of buyers in the European market, particularly in the Mediterranean, are currently unwilling to receive LSFO labelled under CN code CN 2707 9999, resulting in it not being fully merchantable within Europe. While code CN 2707 9999 is typically used as standard within the Netherlands, this practice has not yet been followed by the majority of other European countries trading LSFO.

Market feedback showed support for a rapid clarification of Platts standards around CN coding for LSFO.

Buyers providing bids for publication by Platts must be willing to accept fuel with the CN code 2710 1964. Platts will also publish bids in which the buyer specifies that they will also accept CN code 2707 9999. Buyers should not bid for fuel with a CN code 2707 9999 designation only, as this may be unduly restrictive in nature.

In instances where the CN code used has a material effect on LSFO value, Platts may normalize offers of fuel with CN code 2707 9999.

In CIF Mediterranean LSFO bids and offers, Platts will consider the CN classification of the material as a relevant factor in determining merchantability. Platts understands that LSFO classified as 2710 1964 is currently seen as generally merchantable in the Mediterranean market.

Platts will continue to monitor LSFO activity and flows under both of these codes.

Please send all comments to europe_products@spglobal.com and pricegroup@spglobal.com. For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.