SUBSCRIBER NOTE: Platts to launch US 0.1%S bunker fuel assessments

Following extensive feedback from the industry and a formal consultation period which ended December 17, 2014, Platts confirms that it will launch new assessments for maximum 0.1% sulfur bunker fuel in Houston and New York with effect from Monday, January 5, 2015.

Feedback has strongly suggested that fuel supplied with new sulfur standards in mind is likely to more closely conform to standard RMG 380 specifications, with the low sulfur cap. Therefore Platts assessments at both ports will reflect bunker fuel that meets or is better than RMG 380, with a maximum sulfur content of 0.1%. The assessments will be published in dollars per metric ton.

A new market for 0.1% sulfur bunkers is expected to emerge as the industry adapts to International Maritime Organization rules, coming into effect on January 1, 2015, which limit the sulfur content for marine fuel used by ships within 200 miles of shore in the North American Emissions Control Area to 0.1%, down from a current maximum of 1%.

Several industry participants have announced their intention to sell a new bunker product to meet the tighter emissions rules.

There are many possible ways for companies to blend a new product to meet the 0.1% sulfur cap, and Platts expects the market to need some time to understand the behavior and value of these different blends.

As a result, during an initial transition period, the two new assessments will be derived from a calculation based on the prices of their most typical components, low-sulfur straight run fuel oil and ultra-low sulfur heating oil, weighted to allow a blend of the two to meet the 0.1% sulfur limit.

For the 0.1% bunker fuel assessment in Houston, Platts will use the existing assessments for Straight Run LS Dlvd USGC vs WTI Mo01 (AALFS00), front month NYMEX WTI at 3:15 pm Eastern Time (NYCRM01) and ULS Heating Oil USGC Prompt Pipeline (AAXFD00).

For the 0.1% bunker fuel assessment in New York Harbor, Platts will use the existing assessments for Straight Run LS Dlvd USAC vs WTI Mo01 (AALFU00), front month NYMEX WTI at 3:15 pm Eastern Time (NYCRM01) and ULS Heating Oil barge FOB NYH (AAXPX00).

Platts will monitor market activity for the new 0.1% bunker fuels on an ongoing basis, and intends to use that activity as the basis for the assessments as and when a transparent and well-defined market for the fuels becomes established. Any such decision to move away from the calculation basis for the new assessments will be announced with due notice.

The new assessments will reflect fuel loading three to seven days forward from the date of assessment. The minimum stem size will be 200 mt and the maximum 1,000 mt.

This product is intended for use in ships and should follow normal market conventions around what is and is not acceptable in its makeup.

Please send feedback to americas_bunkers@platts.com and pricegroup@platts.com.

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