Why the feared IMO 2020 spillover effect on diesel markets didn’t happen
A year ago, as 2020 dawned, the trucking industry was eyeing a marine fuel regulation that it feared could spill over into diesel markets, boosting the price of that fuel.
It didn’t happen.
IMO 2020, after years of preparation and anxiety, made its full debut on Jan. 1. The International Maritime Organization’s core requirement was that marine fuels needed to meet a new sulfur specification globally of 0.5%. The previous limit, found in high-sulfur fuel oil, was 3.5%.
Where this was going to possibly impact diesel markets is that one of the ways to comply with that rule was to produce a new product called very low sulfur fuel oil (VLSFO). The problem for diesel markets — at least according to the projections — was that a product called vacuum gasoil (VGO), which could be used to produce diesel, was going to be needed to produce VLSFO. VGO, like diesel, is a distillate product. And the concern was that the distillate molecules found in VGO that would head off to make VLSFO would be diverted away from making diesel.
“Even sophisticated refiners worried they might not make enough complaint fuel to meet shipping demand without risking supplies of the lighter products needed to blend very low sulfur fuel oil,” Sandy Fielden, the director of oil and products research at Morningstar, wrote in a recent report about what happened to IMO 2020 in its namesake year.
But then the pandemic hit and all bets were off.
As for diesel, it mostly boiled down to those distillate molecules. With diesel demand falling at the start of the pandemic (though nowhere near the decline in gasoline demand) and demand for jet fuel, another distillate, cratering by enormous levels, there were plenty of molecules to go around, including enough to make compliant marine fuel.
“At the end of last year, impending International Maritime Organization regulations mandating the use of VLSFO … were expected to divert distillate supplies to meet the new specifications,” Fielden wrote back in October in a review of the distillate market. “The IMO 2020 fuel shortage never transpired in early 2020 after refiners produced enough VLSFO to meet shipping demand.”
Fielden’s year-end report also discussed the economics of scrubbers on ships, an alternative that would have allowed a ship to meet tighter sulfur specifications while burning high-sulfur fuel oil (HSFO). That’s relevant to diesel because a ship still able to burn HSFO because of a scrubber is by definition a ship that doesn’t need to burn VLSFO.
But to make the cost of the scrubber work — which Fielden assumed as $2.7 million — the spread between VLSFO and HSFO would need to be wide enough that the lower costs for buying cheaper fuel would pay off the scrubber cost in a reasonable time. And according to Fielden, the collapse of various markets meant that did not happen in 2020.
The analyst noted that in February, before the pandemic, the spread between fuel oil that was compliant with IMO 2020 and traditional HSFO got as wide as $210/metric ton, or $33/barrel. With that sort of spread, Fielden said, the payback period for investing in a scrubber fell to less than a year.
But with the collapse of the demand for refined products, “IMO 2020 concerns vanished when the sulfur spread narrowed in April and stayed low for the rest of the year,” Fielden wrote.
Refiners went ahead with making less HSFO as part of their overall cutback in operations. But the collapse in demand for lighter-sulfur transportation fuels like gasoline and diesel meant that the spread between low-sulfur and high-sulfur products narrowed. According to Fielden’s data, the low-sulfur fuel oil to high-sulfur fuel oil spread averaged $22.90/b in February, was down to a little more than $9/b in July and was $14/b in the first half of this month. “That translated to a longer 1.64-year payback period for installing scrubbers on a VLCC tanker, discouraging shippers from making the investment,” he said.
There were other market developments that kept the price of products higher in sulfur from collapsing, a decline that would otherwise have incentivized scrubber conversion. A new tighter specification for sulfur in gasoline, which also raised market concerns, proved to be such a nonevent because of weak gasoline demand that sulfur credits trading at one point for more than $3,000 fell to $167 per credit by the end of the year. Cutbacks by OPEC in its production of high-sulfur crudes outpaced cuts in lower sulfur U.S. crudes, resulting in high-sulfur crudes increasing in price relative to low-sulfur grades.
These developments “would all have attracted long odds this time last year,” Fielden wrote. “Instead, refiners faced urgent challenges from low margins and reduced capacity this year that render 2019’s expected hiccups harmless by comparison.”
Comments
Deja una respuesta
Lo siento, debes estar conectado para publicar un comentario.
buy ssn dob with bitcoin best darknet market for steroids [url=https://heineken-darkmarket-online.com/ ]marijuana dark web [/url]
best dark web counterfeit money tor market url [url=https://heinekenonion.com/ ]darknet market guide [/url]
black market access cypher market link [url=https://darkmarket-heineken.com/ ]black market credit card dumps [/url]
tor marketplace dark web sites drugs [url=https://heinekendarkmarketonline.com/ ]Heineken Express url [/url]
Everything information about medication. Read information now.
https://clomiphenes.com where buy generic clomid tablets
Long-Term Effects. Drugs information sheet.
deep website search engine dark web shop [url=https://darkmarketheineken.com/ ]dark net market links 2023 [/url]
onion dark web list dbol steroid pills [url=https://heinekenexpressonion.com/ ]reliable darknet markets [/url]
hidden marketplace dark websites [url=https://heinekendarkmarketonline.com/ ]drugs from darknet markets [/url]
Kingdom darknet Market onion market url [url=https://darkmarketheineken.com/ ]darknet market comparison chart [/url]
dark markets hungary dark chart [url=https://heinekendarkmarketonline.com/ ]archetyp market url [/url]
duckduckgo onion site biggest darknet market 2023 [url=https://dark-web-heineken.com/ ]darknet xanax [/url]
deep web links 2023 reddit darknet market package [url=https://darkmarketheineken.com/ ]dark web directory [/url]
link de hiden wiki darknet drugs germany [url=https://darkwebheineken.com/ ]dark market [/url]
darknet market wikia darkfox url [url=https://heineken-darkmarket-online.com/ ]black market credit card dumps [/url]
uncensored deep web best dark web search engine link [url=https://heinekenonion.com/ ]dark markets guyana [/url]
top onion links dbol steroid pills [url=https://heineken-darkmarket-online.com/ ]orange sunshine pill [/url]
darknet market drug what darknet markets still work [url=https://heinekenexpressonion.com/ ]reddit darknet market superlist [/url]
brucelean darknet market deep dark web markets links [url=https://darkmarketheineken.com/ ]darknet market noobs guide [/url]
dark web onion markets darknet market busts [url=https://heineken-darkmarket-online.com/ ]darknet market buying mdma usa [/url]
darkmarket link darknet market [url=https://darkwebheineken.com/ ]which darknet markets accept zcash [/url]
darknet markets 2023 updated underground card shop [url=https://darkmarketheineken.com/ ]black market websites credit cards [/url]
darknet markets availability bitcoin dark web [url=https://heinekendarkmarketonline.com/ ]best onion sites 2023 [/url]
All trends of medicament. What side effects can this medication cause?
https://edonlinefast.com best ed treatment pills
Comprehensive side effect and adverse reaction information. Some trends of drugs.
darknet market reddit 2023 dumps shop [url=https://heineken-onion.com/ ]tor2door link [/url]
Medscape Drugs & Diseases. Some are medicines that help people when doctors prescribe.
[url=https://edonlinefast.com]erectile dysfunction drug[/url]
Everything information about medication. Medscape Drugs & Diseases.
dark markets macedonia popular dark websites [url=https://darkmarket-heineken.com/ ]dark web market links [/url]
darknet markets for steroids how to browse the dark web reddit [url=https://darkmarketheineken.com/ ]vice city market [/url]
free online roulette money slots academic writing services uk
darknet market onions deep web shopping site [url=https://darkwebheineken.com/ ]we amsterdam [/url]
darknet drug vendors how to access dark net [url=https://darkmarketheineken.com/ ]reddit darknet market australia [/url]
bohemia darknet market Abacus link
what darknet markets still work urls for darknet markets
darknet buy drugs how to shop on dark web
deep dot web markets darknet market vendor guide
mdm love drug dark web markets 2023
vice city market url australian dark web vendors
shop on the dark web how big is the darknet market
best darknet market reddit 2023 darknet markets list reddit
deep net access cypher market link
dark web drugs nz deep net access
bitcoin drugs market onionhub
incognito darknet market best darknet market reddit 2023
weed darknet market trusted darknet markets
alphabay market onion link best lsd darknet market
reddit darknet market deals dark markets india
how to anonymously use darknet markets onionhub
darknet market credit cards bitcoin darknet drugs
black market prescription drugs updated darknet market links 2023
deep web cc sites buying drugs on darknet
google black market archetyp market link
darknet market alphabay darknet black market sites
darknet markets australia how to access darknet markets
underground market online dark markets bolivia
legit darknet markets 2023 how to dark web reddit
darknet market xanax archetyp market url
darknet market status darknet market dash
dark market links incognito market link
dark web trading counterfeit money onion
darknet websites wiki dark web address list
what bitcoins are accepted by darknet markets adress darknet
best darknet market drugs darkfox market url
superlist darknet markets tor search engine link
list of darknet markets 2023 darknet credit card market
new onion darknet market url hidden wiki
grey market darknet dark web sites name list
Cocorico Market url safe darknet markets
dark web shopping darknet market xanax
best darknet drug market 2023 darknet market deep dot web
deep web directory onion reddit darknet market list
safe list of darknet market links archetyp market darknet
darknet paypal accounts darknet dream market link
reddit working darknet markets deep web drugs reddit
link de hiden wiki dark markets luxembourg
dark market links Abacus Market url
duckduckgo dark web search adress darknet
onion link reddit darknet market reddits
black market illegal drugs darknet market updates 2023
Abacus darknet Market deep deep web links
darknet stock market buy bank accounts darknet
how to buy drugs on the darknet biggest darknet market
marijuana dark web darknet market list reddit
blacknet drugs deep web weed prices
darknet market deep dot web how to create a darknet market
darknet market status counterfeit money dark web reddit
search darknet markets versus project market link
dark web prostitution best darknet markets reddit
illegal black market darknet market search
current darknet markets incognito darknet market
darknet markets list market cypher
live onion dumps shop
darknet market directory darknet reddit market
how to buy from the darknet markets lsd google black market
r darknet market deep web drugs
dark markets india darknet list
buy darknet market email address best australian darknet market
best darknet markets bitcoin cash darknet markets
top ten dark web darknet gun market
grey market darknet darknet drug trafficking
drug trading website which darknet markets are still open
open darknet markets cp onion
best mdma vendor darknet market reddit how to dark web reddit
dnm xanax top darknet market now
best darknet market for psychedelics how to browse the dark web reddit
black market website current best darknet market
darknet markets 2023 updated best darknet market for weed uk
darknet market stats archetyp darknet market
tor2door market darknet list of online darknet market
darknet drug vendor that takes paypal reliable darknet markets reddit
darknet drugs links euroguns deep web
what darknet markets are still up darknet drug markets reddit
dark markets monaco darknet market comparison chart
deep web market links reddit best darknet markets uk
buying drugs online on openbazaar bitcoin market on darknet tor
what darknet markets are still open buy drugs on darknet
dark web links adult alphabay market