SUBSCRIBER NOTE: Platts clarifies methodology for 0.5% sulfur marine fuel assessments

S&P Global Platts will begin publishing daily cargo and barge assessments for marine fuels with a maximum sulfur limit of 0.5% across key ports globally from January 2, 2019, using the same assessment methodology it currently uses to assess high sulfur fuel oil barrels in each region.

The new assessments would be named "Marine Fuel 0.5%," and would be published initially for cargoes or barges loading from the key bunkering hubs of Singapore, Fujairah, Rotterdam and Houston.

This follows an announcement by Platts March 26, 2018, that it will begin publishing these assessments from January 2, 2019, following extensive consultation with the industry and a formal review of its global residual and bunker fuel assessments in February 2017. The announcement can be viewed at: https://www.spglobal.com/platts/en/our-methodology/subscriber-notes/032618-platts-to-publish-05-sulfur-marine-fuel-assessments

The launch of these "Marine Fuel 0.5%" assessments would come 12 months ahead of the planned introduction of new sulfur limits in marine fuels by the International Maritime Organization from January 1, 2020.

NEW ASSESSMENT SPECIFICATIONS: As previously announced, these new assessments would reflect specifications for RMG fuels as defined by the International Organization for Standardization in document ISO 8217:2010 Petroleum products - Fuels (class F) - Specifications of marine fuels, but with a sulfur cap of 0.5%. Feedback received so far also suggests that new 0.5% sulfur marine fuel blends are likely to be of comparatively lower viscosity than prevailing fuels.

The new assessments will reflect existing parameters for volume, delivery period, size, and pricing basis for HSFO cargoes in Singapore and Fujairah, and HSFO barges in Houston and Rotterdam.

ASIA: The "FOB Singapore Marine Fuel 0.5%" assessment would reflect FOB Straits bids, offers and trades for 20,000-40,000 mt cargoes loading 15 to 30 days from the date of assessment. Market participants should specify loading for a five-day date range when submitting bids and offers for publication.

MIDDLE EAST: The "FOB Fujairah Marine Fuel 0.5%" assessment would reflect bids, offers and trades for cargoes typically 20,000 to 40,000 mt each, for loading 20 to 40 days from the date of assessment. Market participants should specify loading for a five-day date range at the time of submitting a bid or offer for publication. Cargoes loading from any safe and sound port within the region would be considered for the assessment and normalized for loading FOB Fujairah.

EUROPE: The "FOB Rotterdam Marine Fuel 0.5% Barge" assessment will reflect parcels of 2,000 to 5,000 mt each. Barges are typically traded in 2,000 mt lots. In all cases, the smallest tradeable size is considered to be the strongest indication of value, and in this case the smallest size applicable is 2,000 mt.

The assessment will reflect the value of barges loading FOB basis Rotterdam, for loading 3-15 (Monday to Tuesday) or 5-15 (Wednesday through Friday) days forward, with value normalized to reflect the mean value of these loading ranges. Barges typically trade for the front five days, middle five days or the back five days. The Platts 0.5% barge assessment will be based on bids/offers and trades for 5-day loading windows.

AMERICAS: The "USGC Marine Fuel 0.5%" assessment will reflect barges loading seven to 15 days forward from date of publication, with a minimum volume of 45,000 barrels. It will reflect marine fuel loading basis FOB Houston from the following terminals: Intercontinental Deer Park Terminal, Magellan Galena Park Terminal, Bayport Container Terminal (LBC), Houston Fuel Oil Terminal (HOFTI) and Battleground Oil Specialty Terminal (BOSTCO). Bids, offers and trades published on any basis other than FOB Houston, including FOB New Orleans and FOB Galveston Bay, may be normalized for reflection in the assessment. Timing laycans are standardized as front window (seven to nine days forward), middle window (10-12 days forward), back window (13-15 days forward), and full window (seven to 15 days forward). In any full window bid or offer, the buyer must declare a three-day delivery window upon lifting during the MOC process.

Product reflected in all Platts marine fuel assessments shall not contain petrochemical wastes, residues from acid-catalyzed refining process, spent chemicals, waste lubricants, tar bottoms or hazardous waste.

MOC PUBLICATION GUIDELINES: Platts would consider for publication in its Market on Close assessment process information from companies that are able to participate in the fuel oil MOCs in the respective markets. Participants may submit bids, offers and trades on a fixed- or floating-price basis. In addition, all Platts MOC and operational guidelines for the existing HSFO assessments in the respective markets would apply to the new assessments.

In the absence of an active spot market, these assessments would initially reflect information on blend economics from related fuels.

For further details on existing assessments, please refer to the regional methodology and specifications guides. These are available at: https://www.spglobal.com/platts/en/our-methodology/methodology-specifications Platts will continue to engage with all stakeholders and monitor for new fuel specification standards as they emerge to ensure its assessments reflect fuel grades that are most widely used. Platts would provide timely notifications for any major changes to the assessments, including for any updates in specifications.

Please send all feedback and questions to oilgroup@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.