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Singapore low sulfur marine gasoil demand strengthens despite seasonal lull: traders

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Singapore low sulfur marine gasoil demand strengthens despite seasonal lull: traders

Singapore — Demand for low sulfur marine gasoil has been gaining momentum in recent weeks despite the seasonal year-end lull, as shipowners continued to gear up for the switch to cleaner fuels ahead of the International Maritime Organization's reduction of bunker fuel sulfur limits to 0.5% starting 2020, trade sources said this week.

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Currently, the sulfur limit for marine fuels is 3.5%.

Suppliers and traders reported steady buying inquiries for LSMGO over the past few weeks, even though overall bunker demand was slower owing to a buying lull at the end of the year.

"We are gradually seeing more LSMGO inquiries and for bigger quantities, while RMG [380 CST bunker fuel] is slower these days," a Singapore bunker fuel trader said.

"A lot of owners are preparing for IMO 2020 and some of them are testing their engines using gasoil, especially those who are not installing scrubbers," the trader added.

LSMGO demand in Singapore has seen a steady uptick as the global mandate for cleaner marine fuels from 2020 looms, with sellers reporting a general 50%-70% increase in inquiries for distillates compared with two years ago.

Sales touched an all-time monthly high of 143,200 mt in October, according to data from Singapore's Maritime and Port Authority. Last year's total LSMGO sales also struck a record high of 1.29 million mt, MPA data showed.

"Our LSMGO sales are pretty steady, there is no choice for customers but to gradually switch to alternatives like LSMGO unless they install scrubbers or go for mixed blends," a Singapore bunker fuel supplier said.

The Port of Singapore is also set to enhance its infrastructure and services with an upcoming mass flow meter mandate for distillates.

The MPA is scheduled to mandate the use of MFMs for delivery of distillates at the Port of Singapore from July 1, 2019.

In October, the MPA said it had begun acceptance tests to roll out MFMs on bunker tankers for the delivery of distillates, with the first test completed in September.

LSMGO is likely to become a popular fuel choice in 2020 as the shipping industry moves away from heavy fuel oil to comply with the sulfur cap.

--Jeslyn Lerh, jeslyn.lerh@spglobal.com

--Edited by Norazlina Juma'at, norazlina.jumaat@spglobal.com

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