With higher MGO demand, the global refining market will be tighter for diesel và result in more excess gasoline in the short term. There will be a higher premium for diesel from 2020 lớn 2022, as diesel–gasoline spreads widen initially & then return khổng lồ levels indicating a more balanced market after a few years.
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Combined with higher crude runs, the loss of HSFO demand from bunkers will send the global residual fuels market into oversupply in 2020 và 2021, forcing excess resid khổng lồ find a trang chủ in nguồn generation. HSFO will then price at substitution economics versus natural gas, which will lower resid prices & widen the light-heavy differential.
Finally, additional refinery capacity, increased supply of VLSFO, và greater installation of scrubbers will all eventually contribute lớn a more stable market. While refinery utilization và margins will be higher in 2020, they will start lớn dip in 2021 as capacity additions và slower demand growth start to offset the initial MARPOL impacts.
Strategic opportunities for traders và refiners
Despite changing fuel markets and increased regulations, MARPOL presents strategic opportunities for traders and refiners in the next few years. Those able lớn identify & secure demand can create a competitive advantage, particularly in 2020.
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Players with strong trading & wholesale kinh doanh can benefit from an ability khổng lồ blend low-sulfur resid và make VLSFO. However, making VLSFO will require additional tankage and higher logistical costs as low-sulfur streams must be segregated from high-sulfur streams. Traders và marketers able khổng lồ find a home for high-sulfur resid will also have an advantage. Companies with bunkering capabilities will have the opportunity to gain new customers, as shipping companies are expected to favor a specific company or brand across the globe lớn avoid compatibility problems. However, such consolidation will require fuel lớn be consistent across facilities.