Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.

  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Oil | Shipping

Feature: Bunker market looks for extended credit lines as IMO 2020 nears

Oil | Crude Oil | Gasoline | Coronavirus

China under pressure to export more refined products after Q2 oil shopping spree

Shipping | Marine Fuels

Platts Bunkerworld

Capital Markets | Commodities | Oil | Crude Oil | Refined Products | Fuel Oil | Gasoline | Jet Fuel | Naphtha | Marine Fuels | Equities | Financial Services | Banking | Non-banks | Private Markets

North American Crude Oil Summit, 3rd annual

Oil | Jet Fuel

India's jet fuel exports seen extending declines on refinery works, weak demand

Feature: Bunker market looks for extended credit lines as IMO 2020 nears


Bunker traders to be vital sources of credit

Smaller shipowners, bunker suppliers at risk

$4 billion/month of extra credit needed in 2020

Singapore — Shipowners and creditors are scrambling for additional credit lines to cover the anticipated rise in low sulfur fuel oil prices post IMO 2020, market participants said this week.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

About $4 billion/month of extra credit will be needed starting 2020 to cover the rise in demand for LSFO and shipowners are already demanding longer payment windows as the market dynamics shift, Adrian Tolson, Senior Partner at 2020 Marine Energy told S&P Global Platts.

"There will undoubtedly be more [credit] risk...unless customers opt for scrubbers, each client will need a larger credit facility to buy today's equivalent of new compliant products," a Middle Eastern bunker trader said.

Valuations for low-sulfur fuels are set to rise going into 2020, with a gradual uptrend in demand starting this year as the industry gears up for the new sulfur cap.

The premium of Marine Fuel 0.5% FOB Singapore cargo assessments over the high sulfur fuel oil 380 CST Mean of Platts Singapore strip averaged $101/mt in July so far, compared with $88/mt in the second quarter this year and $46/mt in the first quarter, Platts data showed.

The premium of Singapore-delivered marine gasoil (0.1%) over the Mean of Platts Singapore 10 ppm gasoil assessments averaged $20/mt in July so far, compared with $9/mt in first half of 2019 and $7/mt in the second half of 2018, according to Platts data.

Shipowners are currently under pressure to evaluate existing credit lines and some are even expanding their supplier network in preparation for 2020, an Asia-based ship owner and operator said.

"Securing credit is likely to become more difficult [post 2020], particularly in the case of smaller shipowners who cannot leverage their position with bunker suppliers," said a tanker owner, noting bunker suppliers and traders will be exercising more caution when analyzing ship-owner financials and their payment history.

Smaller bunker suppliers may also experience challenges in extending credit lines to shipowners, who would face greater procurement costs owing to a more expensive cost premium of low-sulfur fuels over high-sulfur fuels.

"Credit lines will be an issue for many suppliers especially the smaller ones. There is hence likely to be a greater need for bunker traders who can provide extra credit lines," a bunker supplier in Singapore said.

Bunker traders will likely extend more credit, though they will not be able to cover the full $4 billion of extra credit needed a month, Tolson from 2020 Marine Energy added.

"The market will be taken over by a new set of suppliers. On the physical side it will be refiners and major oil companies and there's no way they will be extending credit up and down the supply chain to every ship owner," Tolson said.

"We're seeing the bigger traders really leveraging their positions as far as credit is concerned and that is going to continue," John Philips, global head for bunker credit at GP Global, said at the S&P Global Platts' 3rd Annual Bunker and Shipping Asia Conference in Singapore last week.

He added that competition among traders was set to heighten in 2020.

Sales volumes for low sulfur fuels have been on the rise in Singapore, data from the Maritime and Port Authority of Singapore showed.

Low sulfur fuel oil sales rose 143% to 317,900 mt in the first half of 2019 as compared to the previous year, while low sulfur marine gasoil sales totaled 1.29 million mt in H1 2019, up 84% compared to H1 2018, MPA data showed.

--Tahani Karrar,

--Surabhi Sahu,

--Jeslyn Lerh,

--Edited by Kshitiz Goliya,