Singapore — Delivered low sulfur marine gasoil prices in Hong Kong tumbled 17.93% in December so far versus November, as demand has been surprisingly weak despite the upcoming implementation of the Emission Control Area regulation, due to ample supply.
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Prices have dropped from an average of $681.86/mt in November to $559.60/mt to date in December, S&P Global Platts data showed.
China will extend the 0.5% sulfur limit on marine fuels from Yangtze Delta to its entire coastline from January 1, a year ahead of the International Maritime Organization's regulation. The IMO rule will cap sulfur in marine fuels at 0.5% worldwide from January 1, 2020, down from the current 3.5%.
There is less availability of marine fuel in December as suppliers import less cargo to clear inventories before the last day of the year for accounting purposes. But suppliers had expected a surge in demand ahead of the January regulation and imported more cargo than last year, a Hong Kong-based supplier said.
"But it is mid-December already and demand is not getting better," he said.
Suppliers were, however, not too concerned about excess inventories and were positive that demand should pick up from here.
"We are slightly behind [in clearing stock] but it's not that bad," another supplier said.
"Christmas and New Year are coming; demand for shipping consumer goods should increase. We will be keen to sell whatever stock that is left," a supplier said.
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Market sources attributed the weakness in demand to requirements having been met earlier and a slower economy this year.
"Shipowners have already filled up their tanks [on LSMGO] in November, demand this month has dropped," a third supplier said.
China's ministry of transport announced early December the expansion of the ECAs to encompass China's entire coastline, extending from the initial area covering Yangtze Delta, Pearl River Delta and Bohai Rim applied to vessels sailing within 12 nautical miles of the coast.
As part of the latest move, large vessels will be required to burn 0.5% sulfur bunker fuel while the smaller ones will have to consume 10 ppm sulfur bunkers, in line with the National Phase 5 and 6 emission standards, when they are in the inland waterways.
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