Warm reminder: The full text is long and it takes about 8 minutes to read. The background of
"2020 Global Sulfur Limit Order"?
❶ IMO MEPC70, global sulfur emission limit has been reduced from 3.5% to 0.5% , and it will take effect on January 1, 2020, and will no longer be postponed-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
❷ IMO MEPC73, From March 1, 2020, ships that do not install the replacement equipment SCRUBBER will not be allowed to carry high sulfur fuel ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
❸ The 2020 Global Sulfur Limit Order will strengthen its execution through the contracting party PSCh. The PSC system design is so effective---Do you have to doubt the execution of PSC? !
2020 Global Sulfur Limit Order, that is, by limiting the sulfur content of marine fuel, it controls the emission of diesel engine exhaust sulfides, thereby reducing air pollution. The effective design of the PSC system makes the port country PSC the most influential in the supervision of ships. Therefore, the 2020 Global Sulfur Limit Order will strengthen its execution through the contracting party PSC (no need to doubt the execution of PSC!) .
The essence of “2020 Global Sulfur Limit Order”?
essential impact is long-term and represents future trends...
❶ is the result of legislation
"2020 Sulfur Limit Order" is promoted by the United Nations IMO. It is held by the MEPC (Marial Environmental Protection Commission) to discuss and vote in accordance with certain procedures. It is the result of legislation, and the "process + result" inspection is carried out through relevant inspections and inspections to ensure the effectiveness of supervision; the United Nations IMO encourages and promotes the contracting parties and requires the implementation of contracting parties, the United Nations IMO formulates guidelines and review standards (IACS participation), and the classification society (IACS) approved or authorized by various flag countries to complete the experimental certification of a certain equipment and issue a type accreditation certificate. Therefore, the certificate represents the authority and credit of the issuing authority to a certain extent.
❷ is the contract and performance of the flag country
After IMO declares the Convention to come into effect, the relevant competent authorities of various countries inspect the ships belonging to the flag state, which is the inspection of the FSC of the ships belonging to the flag state, and the inspection of the ships belonging to the non-flag state is the inspection of the PSC of the port state. The flag state issues a certificate or passes its authorized classification society (Recognized Organization) to inspect and issue a certificate; at the same time, the IMO collects the inspection of the flag state and the inspection of the PSC of the port state by the FSC of the flag state and the inspection of the PSC of the port state. According to the results, we will check the implementation and evaluation of the results of the Convention to test the feasibility and adaptability of the Convention, and regularly or irregularly amend and improve the Convention according to the results and needs; the international maritime convention is an important international regulation to safeguard international cooperation and trade, and has been widely respected and implemented by member states. Research and practice of international maritime conventions is a need for my country's "Belt and Road" construction, and a need for global division of labor and cooperation and global trade compliance and efficiency;
❸ The "2020 Sulfur Limit Order" is a correction to the IAPP, marking the increase in the requirements for international atmospheric anti-pollution SOx sulfur emissions
has been implemented for many years in sulfur emission control areas such as the EU/US. my country has also responded positively about the 0.5% sulfur emission limit of the "2020 Sulfur Limit Order". All major regions and localities have been closely supporting relevant policies and measures, such as the "Yangtze River Delta", "Pearl River Delta", "Bohai Rim", etc., and now the baseline of the 12-nautical mile territorial sea, including Hainan Province, belongs to the 0.5% sulfur emission control area.
❹ The essential impact is long-term, representing the future trend
The essence of the "2020 Sulfur Limit Order" is that the international community pays more and more attention to environmental protection, and its requirements are becoming more and more stringent; what are the details of fulfilling the contract? How to interpret it? Regarding the inspection of the flag state FSC and the inspection of the port state PSC, it is very simple and principled, and the results will be very rough, which is worthy of arousing enough alertness from the ship owner. The editor below will try to share his interpretation and predictions for reference only!
The substantial impact of the "2020 Global Sulfur Limit Order"?
's substantial impact has a time range, representing living in the present...
❶ Excess capacity, low freight rates, and the cost of safety management is forced to be compressed---Safety accident---Shipping Supply--Reform ?
"Supply-side reform", why supply-side reform? → Overcapacity → Low-price competition → Safety and environmental protection costs are squeezed and threatened → Insufficient investment in seafarer training/spare parts quality → frequent safety accidents; the 2020 Global Sulfur Limit Order can also be understood as the "supply-side reform" of low-standard ships and poor management of shipping companies by increasing environmental protection and operating costs globally;
"Supply-side reform" is still in the ears. my country has been trying out for several years in other fields, and the result is also to see that a large number of "ground steel", "ground tempering" and other "environmental protection unqualified" enterprises have been shut down, and the prices of resources and products such as steel, oil, and cement have soared (Does IMO copy the mode of China?); therefore, whoever can persist to the end will get the final profit and how to reduce costs? Can it ensure safe operation? It is the internal strength and value of shipping management companies.
❷ Reduce transportation capacity, "supply-side reform" of shipping---Who will withdraw from
Every country hopes to have its own world merchant fleet, international shipping consortiums and giants must also maintain and occupy their own world market share. Even ordinary shipping people have the pursuit and dream of becoming ship owners or even ship kings;
International shipping market is as vast/deep and beautiful as the ocean, full of infinite charm/opportunities and hopes, and of course it also faces various challenges/risks and even traps;
From all participants, you can see the figure of the country, demonstrating your will and strength, you can also hear the voice of the shipowner of the shipping consortium, expressing your will and strength, and you can also see the shipping people who are eager to succeed. They have infinite joy and worries about shipping, and persist and persist until they are powerless...
Shipping is so charming and beautiful that no one will withdraw easily. An old leader said that shipping is a world of martial arts, and once you enter, you will be involuntarily - the taste of martial arts - you will not give up.
❸ Carry the banner of environmental protection and take the road to rising oil prices---raising the threshold
Globalization has brought full marketization of the world's shipping industry. The shipping industry has changed from a traditional "monopoly and high-level" industry with high investment, high risk, and high returns to a "low-threshold hard-working" industry with high investment, high risk, and low returns. Who would be unhappy? And have the ability to do something?
At this time, the will and strength of the country, the will and strength of the consortium shipowner, will be highlighted. Since everyone is unwilling to withdraw, what should we do? ---Carry the banner of environmental protection and take the road to raising oil prices.
❹ Why do you say that you should carry the banner of environmental protection and take the road to rising oil prices?
You can first look at the ranking of air pollution cities in the world and my country:
The above picture, how many are shipping center port cities? Xinjiapo? Shanghai? Will the air at sea be polluted to the shore? Of course, pollution is absolute, but the main body needs to understand it! But letting shipping take the blame and let shipowners pay for the bill is the rules of the game... If you touch it, you can find you... you have to accept the punishment----It is absolutely correct to carry the banner of environmental protection.
How to increase oil prices - low-sulfur oil with lower sulfur content is basically lower and lower, the lower the sulfur content, the higher the price.
is like the wine that Westerners drink - the lower the sugar content, the higher the taste, the higher the price. This seems to be a recipe familiar to Westerners - high oil prices are on the way.
❺ "2020 Global Sulfur Limit Order" came into being--Make Rules
Since everyone is unwilling to withdraw, what should I do? If you want to do it, do it, and maybe everything you want will come true.
Therefore, the will and strength of the country, the will and strength of the shipowners of the shipping consortium, will be highlighted, and only they have the objective willingness and strength to reduce their capacity at the same time. They are "people with high IQ, power, money and leisure", and you can learn about IMO.
IMO works under the framework of the United Nations. The country is through the flag state and its own classification society. The owners also express/express their will/will and strength through the flag state and classification society registered by their ships. The flag state and classification society may be their main promoter of the "2020 Global Sulfur Limit Order" in IMO. The method of promoting
is to raise the environmental protection threshold through legislation, that is, to increase operating costs by raising oil prices, so as to achieve the goal of eliminating transportation capacity. This may be a fairer game rule that everyone recognizes - the "2020 Global Sulfur Limit Order" came into being.
IMO will vigorously promote the "2020 Global Sulfur Limit Order" until the established goals are achieved---it will not change
❻ Will the 2020 sulfur limit order lead to high oil prices? ----No need to doubt
see a section of oil supplier information: ▼
Currently high sulfur heavy oil supply, the high sulfur heavy oil supply market is an important terminal demand market for refined oil, stable demand and large batches, it is an important sales channel for upstream refineries and a gold terminal that major oil companies must compete for. According to International Maritime Organization statistics from IMO, IEA, US Energy Information Administration EIA and other institutions, the current global marine oil consumption is about 280 million tons in 7 years; by 2020, the global shipping industry will consume 320 million tons of fuel annually.
Global Marine Oil Market Overview, the supply of the top ten ship refueling ports in the world exceeds 100 million tons, and the core ports are mostly concentrated on Asia-Europe routes, such as Singapore, Rotterdam, and Fujai Latin, Antwerp, Hong Kong, Busan, etc. Looking at the global marine oil market, the ship fuel supply of Singapore Port in 2018 was 49.8 million tons, ranking first in the world. my country's Zhoushan Port also entered the top ten oil supply ports for the first time.
low-sulfur heavy oil supply part is below 0.5%, and it will not exceed 50 million tons in 2020. Even if it doubles to 100 million tons, it can only reach about 1/ of high-sulfur heavy oil. 3. It is impossible to completely replace the demand of high-sulfur residue with nearly 300 million tons, and the supply is obvious. The supply of high-priced light oils such as
sulfur content below 0.5% low-sulfur MGO will supplement this gap of about 2/3.
"2020 Global Sulfur Limit Order" will be one-size-fits-all on January 1 next year, greatly changing the supply and demand relationship of fuel We should not doubt the high IMO meeting group. According to public information, shipping industry consumed about 280 million tons of marine fuel oil in 2018, while the consumption of marine fuel oil this year was about 300 million tons;
2020 Global Sulfur Limit Order "is a correction to the IAPP to reduce the emission of ship exhaust sulfides, and the emission volume is reduced from 3.5% to 0.5%. The most direct and reliable way is to reduce the sulfur content of oil feedstocks. As a result, on January 1, 2020, the traditional 300 million tons of high-sulfur fuel market needs to be replaced by 0.5% low-sulfur fuel. low-sulfur oil prices will inevitably skyrocket.
❼ Market voice and pricing power--Giants’ game and compromise
Globally, the alliance of shipping giants has been carried out in advance and has basically completed the layout. They have market voice, negotiate or compromise to form the largest seller market. Small and medium-sized ship owners can only follow or subordinate, while consumers can only be forced to accept price increases.
2020 Global Sulfur Limit Order, why has the shipping industry been so concerned and nervous? On January 1, 2020, this is also the beginning of the shipping giant with administrative or regional monopoly, truly seizing market pricing power.
❽ The 2020 sulfur limit order will be a "ship kill order"--Ship prices fall
2020 global sulfur limit order. If it is truly strictly implemented, is a ship kill order . Old ships are killed like chopping melons and vegetables. The prices of second-hand ships have dropped. A large number of small and medium-sized ship owners have closed down or struggled to support them. Who cares about the life and death of small and medium-sized enterprises? ! There is an oversupply of seafarers and a large number of shipping talents are unemployed, and the business in the shipbreaking market should be hot, but it seems that the industrial market has been restricted in China, and it is less than half a year before January 1, 2020.
❾ The major reshuffle of the shipping industry---the feast of capital
2020 The essence of the global sulfur limit order is a major reshuffle of the shipping industry. Coupled with the repetition and uncertainty of the Sino-US trade war, "low-standard ships" and companies that cannot withstand the toss and poorly managed will be eliminated and cleaned up. Eliminating "low-standard ships" is the key, and eliminating companies that are poorly managed is the key. The essence of the global sulfur limit order in
2020 is to raise the "threshold" of shipping companies. The role of "threshold" is to isolate, isolate and partition, which is similar to the United States raising tariffs for trade protection. The "threshold" is similar to the United States' raising of tariffs for trade protection; "threshold" in other words, it means a certain degree of monopoly. The higher the "threshold", the higher the degree of monopoly, and the lower the consumer's right to choose. In other words, it is low-end ones that are not allowed to play shipping.
As a large number of ship owners go bankrupt, the price of second-hand ships drops, which means that capital is king. The time for picking ships is also the beginning of ordinary shipping people's dream of becoming ship owners. Bad old ships are killed, but really good second-hand ships will be transferred to other companies. Those with 15-20 years of ship age have almost no depreciation costs. You can consider buying second-hand ships made in Europe, Japan or South Korea, and those made in Taiwan are also OK. Domestic ones should be cautious.
➓ The substantial impact has a time range, which means whether you can live in the present and whether you can seize the opportunity
"2020 Global Sulfur Limit Order" analysis?
❶ Eliminating excess capacity is a protracted war, and excess may be inevitable
- the degree of excess will inevitably decrease
First of all, the improvement of the shipbuilding industry to local GDP, support for local employment and the development of national equipment manufacturing technology, is a reflection of the country's comprehensive strength; secondly, the shipbuilding industry is the domestic and international markets, and governments have an instinctive desire and impulse to occupy the domestic and international shipbuilding markets. Therefore, the shipbuilding industry is an industry that is highly valued and supported by the state; finally, shipbuilding technology is so developed, standardized/modular. Now, the speed and quality of shipbuilding can be quantified, and there are also great choices for what kind of ship to build, and capacity growth is easier.
Human factors are the main factor in ship safety management. As long as the ship is not killed, excellent shipping management companies may provide high-quality seafarers and sufficient shore-based support through their professional and high-quality management. Small investments can turn low-standard ships into standard ships, thereby maximizing the surplus value of the ship. This makes the elimination of transportation capacity complicated, and eliminating excess capacity should be a protracted war;
❷ LNG is unrealistic for most existing ships
--New shipbuilding
LNG Ready's machines can be switched to LNG, and LNG Ready's machines are basically worth installing new shipbuilding. Even in the new shipbuilding market, LNG will not occupy the main market share due to the problems of danger, large size, difficult storage, high management requirements and immature technology.
❸ Installing Scrubber "can get the money by one year" "enough market competitiveness"
- The number of modified
Installing Scrubber is of practical significance for large ships with high fuel consumption, especially new ships within 10 years. If the fuel consumption exceeds 50 tons/day, based on the current international foreign trade oil and the average price difference between high and low sulfur oil is around US$200, you can save US$10,000 per day; some container ships can sail for 300 days a year, that is, US$3 million per year, which means that the investment is less than US$2 million, and you can get the money by about one year.
Since the leaser is responsible for fuel costs, long-term leaseholders have the motivation to install Scrubber, but ship owners should also realize that the ships installed with Scrubber will have sufficient market competitiveness in the charter market, and the company will be able to achieve greater development; although the installation of desulfurization towers will bring a series of problems, such as increasing initial investment, subsequent maintenance and spare parts consumption, desulfurization towers are new equipment, and the equipment and technology are not mature and stable enough, and they will also face problems such as increasing generator fuel consumption and increasing workload for cabin personnel; the high price of low-sulfur oil must be tolerated? ! In order to survive and develop, many ship owners have decided to choose to endure and bear it? !
Installing Scrubber is like we don’t control air pollution, but we require everyone to wear a mask.
❹ Compliant low-sulfur oil for combustion, even a large number of high-priced MGO
- becoming the norm
Due to the scarcity of low-sulfur crude oil sources, the installation of new refining facilities takes time and limited production capacity. It is expected that the annual production capacity will be less than 50 million tons in 2020. The low-sulfur fuel gap of nearly 250 million tons will be mainly replaced by MGO. It will become the norm for combustion of large amounts of high-priced MGO for combustion in the next 10 or even 20 years - achieving the high-oil price target.
❺ Safety and economic issues for existing ships for long-term combustion of MGO
——Dixed oil
2020 Global Sulfur Limit Order has been implemented, due to the insufficient supply of low-priced LSFOs and the proportion of ships equipped with desulfurization towers is not high, many ships may be forced to use MGO for a long time. Let me talk about the use of MGO here for your reference.
Notes on using low-sulfur MGO:
a. The process of MGO removing sulfur will reduce the viscosity of MGO and reduce the lubricating performance;
b. Using low-viscosity and low-lubrication performance MGO may cause damage to the oil pump plunger pairs designed for high-viscosity fuel (HFO) operation: A. Difficulty in forming a dynamic oil film; B. It may not be able to provide sufficient injection pressure (small viscosity, severe leakage of the pair); C. Inaccurate injection volume;
c. Engine manufacturers recommend maintaining the minimum fuel viscosity 2CST in the fuel pump import. In order to ensure stable operation of engine start and shutdown, it is highly recommended to use fuel with a viscosity grade greater than 3 CST; The normal range of engine fuel inlet viscosity is 14-18CST, and the viscosity of MGO at 40 degrees Celsius is generally 3-6CST (the viscosity needs to be increased);
d. According to the viscosity-temperature characteristics of fuel oil, the higher the temperature, the smaller the viscosity. If the oil temperature is higher for a long time, the viscosity of the machine oil inlet may be lower than 2CST, and the machine plunger pair will be in an abnormally worn state, which may cause machine damage and put the ship in a dangerous state. Due to low viscosity and poor lubrication performance, fuel leakage in the cabin, especially in the oil distributor, will greatly increase the fire risk in the cabin.
Considering the adverse effects of long-term use of MGO, is it possible to mix oil?
oil mixing principle:
a. Light fraction MGO + high sulfur residue oil, mix appropriately to increase the viscosity and lubricating performance of fuel, while reducing the use of high-priced MGO. The mixed ratio refers to the sulfur content of the two oils, and the sulfur content of the mixed oil is controlled below 0.49%.
b. During the use of low-sulfur residue oil, poor combustion performance was found, and mixed with MGO increased combustion performance.
c. Avoid mixing of oil residues in different batches. Inevitably, control it to within 10% to prevent problematic oil.
d. Calls on oil companies to provide mixed oils that are suitable for ship hosts, with suitable viscosity and good lubrication.
How do ship owners respond to the "2020 Global Sulfur Limit Order"?
is not better, what suits you is the best. ❶ Different ship owners
Large ship owners need to respect the market
Small ship owners need to respect the market
Internationally, ship owners with government support/regional monopoly and industry fully competitive and financial strength can not install scrubbers. In fact, those large companies also choose this way. They can hold on until the end, but if the time is too long and if the market price cannot be spoken, they will pay huge fuel costs---large ship owners need to respect the market.
Small and medium-sized ship owners with good management benefits are recommended to install scrubbers, because this is an opportunity for the company to grow bigger and stronger and occupy the market. On the contrary, small and medium-sized ship owners with poor management and management are recommended to sell the ship as soon as possible to avoid being dragged to death slowly, and eventually, they will end up in debt--the small ship owners need to respect the market.
❷ Different oil prices
cost and supply and demand relationship ("2020 sulfur limit order" greatly breaks the supply and demand balance of ship combustion)
" Cost and profit drive oil companies "The same cost, the economic value that can be obtained by processing one ton of crude oil is far higher than the value that can be obtained by processing one ton of low-sulfur residue oil. The oil companies have compliant fuel supply, but it is a unilateral idea to buy cheap and compliant low-sulfur oil. Compliant low-sulfur oil prices are affected by costs and market supply and demand. Refining companies are market-oriented. Low-sulfur oil such as MGO/MDO is in short supply and demand, and refining is simple. High profits, so refining companies do not have the motivation to produce compliant low-sulfur marine residual oil that is difficult to produce technology and low profits?
"Low sulfur crude oil is a scarce resource". my country's crude oil has the characteristics of low sulfur and high wax. Some South American and Russian crude oils have low sulfur content, but the output is limited. The main source of crude oil is Middle East , which is mostly high sulfur. After the oil is distilled and refined, most of the sulfur content remains in the residual oil. Residue is the main source of fuel oil for marine diesel engines; about 1/3 of the residual oil remains in petroleum refining. If the crude oil sulfur fraction is 2%, the denominator will shrink to about 1/3 after refining, and the numerator 2 will basically remain unchanged. The sulfur fraction of the residual oil after refining is about 6%. It can be said that high-sulfur residue oil is an inevitable product of the refining process of high-sulfur crude oil. There is no problem of non-production. It is a problem of value choice for refining companies. If it cannot be sold in hand, it will also occupy the oil tank.
"6% high sulfur residue oil", further hydrogenation and other refining treatment are required to obtain the current sulfur content of no more than 3.5% compliant high sulfur fuel. After the 2020 sulfur limit order, it is necessary to refine sulfur content to not exceed 0.5% compliant low-sulfur oil. It takes more additional costs to reduce it from 3.5% to 0.5%. Is it necessary to refine residual oil from 0.5% to low-sulfur fuel oil with a sulfur content of not exceeding 0.1%? From 0.5% to 0.1%, although the absolute value is only 0.4%, the effort is by no means proportional. It is better to buy MGO directly.
"Maximization of cost and profits". Oil companies and oil merchants are concerned about the maximum cost and profits of products. Of course, the market for compliant and cheap low-sulfur marine residual oil is huge, and this market is also very attractive. Oversupply will reduce prices and cannot be tolerated. Oil companies will invest in equipment and use technical means to produce compliant low-sulfur oil, or "eat dry and squeeze it all" into other chemical products, which may cause serious surplus of other chemical products.
"A huge change in the supply and demand relationship of ship fuel". The 2020 global sulfur limit order will lead to a huge change in the supply and demand relationship of ship fuel fuel. This is an inconvenient prediction. The "2020 sulfur limit order" has caused a sudden surplus of inherent large amounts of high-sulfur residue oil - a price reduction, and the demand for compliant and low-sulfur oil has increased sharply, and supply is in short supply - a price increase, which is a high probability event.
❸ How do small and medium-sized boat owners deal with the "2020 Sulfur Limit Order"?
Scale disadvantages -
All major ship owners can build their own Scrubber factory to meet their own use and external services. Compared with large ship owners, small and medium-sized ship owners themselves have scale disadvantages in their survival and development. How to deal with the 2020 Global Sulphur Limit Order? How can you enjoy the services and prices of Scrubber group buying at a cost similar to that of a large ship owner? Small and medium-sized boat owners need to join forces to keep warm. The HIFLEET team is committed to serving small and medium-sized boat owners, providing them with Scrubber equipment selection, convenient for shipyard reservation, installation and commissioning, after-sales service and other solutions; and formulate installation plans based on the size, type and characteristics of sister ships, and groupings according to the same type, similar to sister ships, 5 ships, 10 ships, or 20 ships;
group purchase discount price-
How to reduce the number of ship owners and shipyards The necessary repeated expenditures are to save time, energy and expenses. Whether you can choose not to participate in the negotiation of prices with all parties, adopt the plan of drawing on sister ships and directly apply the preferential price of group purchases; in this way, the ship owner and ship manager not only save the time and energy of coordination and communication with all parties, but also enjoy the same kind of courtesy as the large ship owner. Due to the large and similar work of group purchases, shipyards, equipment manufacturers, design and installers and other relevant parties prepare in advance and coordinate fully, and the comprehensive cost will have sufficient advantages. In the end, it is possible to enjoy a preferential price of group purchases that is more preferential than the large ship owner.
(Shiyang Laozhi compiled)
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