SUBSCRIBER NOTE: Platts proposes 0.5% sulfur marine fuel assessments from Jan 2, 2019

Following an extended period of discussion, S&P Global Platts proposes to begin publishing daily cargo and barge assessments for residual marine fuels reflecting a maximum sulfur limit of 0.5% across the globe starting January 2, 2019, as well as bunker assessments for the grade from July 1, 2019.

Platts has received feedback from shipowners that all specifications of the new 0.5% fuel type should adhere at least to RMG 2010 specifications on all parameters.

It is therefore proposed that these new assessments would reflect specifications for RMG 380 CST as defined by the International Organization for Standardization in document ISO 8217:2010 Petroleum products -- Fuels (class F) -- Specifications of marine fuels, but additionally including a maximum sulfur limit of 0.5%.

Platts invites feedback on whether additional parameters or different limits should be reflected in these assessments.

The launch of these 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.

Platts proposes to begin publishing new price assessments for RMG 380 CST marine fuel cargoes with a maximum sulfur limit of 0.5%, for loading in Singapore, Fujairah and Houston, and barges in Rotterdam, starting January 2, 2019.

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

This proposal follows extensive consultation with the industry after Platts opened a formal review of its global residuals and bunker fuel assessments in a subscriber note published February 20, 2017.

In addition, under the plan, Platts will begin publishing prices assessments for 0.5% sulfur bunker fuel on delivered and ex-wharf basis at several ports across the world from July 1, 2019.

Platts continues to receive feedback that the change in marine fuel sulfur limits would see most shipping markets change to the use of low-sulfur distillate and/or residual grades or other alternative blends of low-sulfur material.

Platts aims to assess grades and locations of marine fuel that are most widely tradeable and reflective of typical market practices.

Global fuel standards could see further evolution ahead of the planned introduction of new sulfur limits for marine fuels by the International Maritime Organization from January 1, 2020.

Platts will continue to regularly review market conditions, and will monitor for evidence that newer standards are being traded more broadly in the market.

BACKGROUND: On October 27, 2016, the IMO confirmed its decision that it would move ahead with a proposed reduction of sulfur limits in marine fuels to 0.5% from January 1, 2020. The cap had first been proposed in 2008.

Since January 3, 2012, Platts has fully reflected revised bunker fuel specifications set out by the International Convention for the Prevention of Pollution from Ships, or MARPOL, in global bunker fuel assessments.

Under amendments to Annex VI of the convention, high sulfur bunker fuel supplied at major global bunkering locations from 2012 onwards must contain a maximum of 3.5% sulfur, down from the previous maximum sulfur content of 4.5%.

PLATTS ASSESSMENTS: Globally, Platts assesses 180 CST, 380 CST and 500 CST marine fuels at a range of locations on ex-wharf and delivered basis.

Platts also assesses fuel oil cargoes or barges in several key locations, including Houston, Rotterdam and Singapore, with specifications that generally allow deliverability of material in the local bunker fuel markets.

In addition, Platts assesses Marine Gasoil and Marine Diesel fuels in several locations, with sulfur limits varying from 0.1% to 2% depending on the grade and location.

Platts bunker prices are published in Bunkerwire, Bunkerworld and Platts Global Alert, among others.

Platts has also published two further subscriber notes, specifying that Platts intends to continue publishing existing fuel oil and marine fuel assessments following the IMO 2020 change and that Platts proposes to begin reflecting ISO 8217:2010 standards in marine fuel assessments and key fuel oil assessments globally from 2019.

INDUSTRY CONSULTATION: Platts continues to seek comments and feedback on the quality and specifications for the most relevant residual and bunker fuel grades to be assessed leading up to the change in 2020.

Platts typically gives significant lead time for any major changes to benchmark assessments, including changes to specifications.

Platts is also seeking feedback on the most appropriate way in which to reflect historic and future changes to ISO specifications.

Please send all comments, feedback and questions to oilgroup@spglobal.com and pricegroup@spglobal.com by December 29, 2017.

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.