SUBSCRIBER NOTE: Platts to amend USGC 1% fuel oil methodology from December 3

S&P Global Platts will amend its methodology for assessing US Gulf Coast 1% fuel oil barges, with effect from December 3, 2018, due to evolving dynamics in the fuel oil market.

Following a detailed review of the market relationship between the physical high sulfur and low sulfur fuel oil markets in the US, Platts has decided to assess the value of No.6 1% USGC fuel oil barges by applying a differential -- based on the front month "hi-lo" spread in the US fuel oil paper market -- to the value of high sulfur fuel oil barges on the Gulf Coast.

The differential is the sum of the front month "hi-lo" paper spread between USGC HSFO and USAC 1% fuel oil plus a fixed premium of 88 cents/b, reflecting the historically higher relative value of 1% fuel oil in the physical Gulf Coast market.

This decision was also based on feedback from market participants following the initial proposal note published on November 1, 2018. This note can be found at https://www.spglobal.com/platts/en/our-methodology/subscriber-notes/110118-pl atts-proposes-to-amend-usgc-1-fuel-oil-methodology.

As a result of this change, Platts will no longer publish bids, offers or trades for the No.6 1% USGC fuel oil barge market during the Market on Close assessment process from December 3.

Platts proposed this change due to the diminishing use of 1% fuel oil for power generation, which was the primary end-use of this product on the Gulf Coast.

The No.6 1% USGC fuel oil assessment has historically reflected utility-grade fuel oil in line with Florida Power & Light specifications for maximum 1% sulfur fuel oil for delivery to Manatee and Port Everglades, with the exception of gravity of minimum 6 API and Al+Si metals content of maximum 80 ppm. FPL's No.6 fuel oil specifications have since evolved to a maximum 0.7% sulfur fuel oil currently. In the more liquid LSFO market on the USAC, the 1% fuel oil grade is primarily used as a blending component for RMG.

Platts will continue to regularly review market dynamics regarding its No.6 1% USGC fuel oil assessment, particularly following the launch of 0.5% marine fuel assessments at key hubs including Houston in January 2019, ahead of the planned introduction of new sulfur limits for marine fuels by the International Maritime Organization from January 2020. Platts will provide timely notifications on any possible further change to its No.6 1% USGC fuel oil assessment.

Please send all comments, feedback and questions to americas_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.