From Reuters a major piece on what lies ahead:
Hedge funds chart course through 'IMO 2020' storm
Shipping companies, refineries, freight derivatives or diesel cracks? Investment funds are placing their bets as the shipping sector prepares for new rules limiting sulphur emissions from ocean-going vessels....MUCH MORE
Ever since the International Maritime Organization said the maximum sulphur content in marine fuel must drop to 0.5% from 3.5% from 2020, shipping companies have been wrestling with how to comply without driving up costs at an uncertain time for global trade.
Some shipowners are installing exhaust cleaning systems known as scrubbers so they can continue to use high-sulphur fuel and some are switching to low-sulphur marine diesel, but all expect a period of turbulence when the “IMO 2020” rules come in.
Investors in turn are coming up with strategies and launching funds with exposure to parts of the oil and shipping industries they expect to benefit from the new emissions caps.
John Kartsonas, managing partner of Breakwave Advisors, said while broader concerns about trade have dented investors’ views on shipping, IMO 2020 was likely to drive freight rates higher.
Breakwave launched an exchange-traded fund last year to invest in dry bulk freight derivatives, hoping to benefit from IMO 2020.
“Rarely you see such a potentially massive disruption,” said Kartsonas. “Delays, a reduced active fleet supply, slow steaming and port congestion can push freight rates to decade highs, and beyond.”
The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry bulk commodities, slumped after the financial crisis to 700 points from a record 11,793 points in 2008. It’s now about 1,500 points. .BADI
Dry bulk ships make up more than a fifth of the world’s ocean-going vessels and many are among the most polluting ships.
DERIVATIVE BY DESIGN
At hedge fund Svelland Capital in London, one strategy is to focus on petroleum products likely to be affected by the rules.
“IMO 2020, together with the ballast water treatment, will turn shipping upside down and create supply shock,” chief investment officer Tor Svelland said.
Svelland Capital is launching an “IMO direct exposure fund” in July aimed at investors who want to take positions based on IMO 2020, but are less familiar with oil derivatives.
“This is the largest regulatory change in the oil space ever and it will have a massive effect far outside of shipping,” said the fund’s portfolio manager Kenneth Tveter....
A few of the dozens of posts that may be of interest:
Shipping: CMA CGM May Be Building A Big Fuel Price Advantage
Oil/Shipping: "Where will all the residual fuel go after ships barred from using it?"
"Shipping: 2020 Low Sulfur Fuel Requirements Will Disrupt Oil/Refined Markets Up to Five Years".
Shipping: The New Low Sulfur Rules Will Have A Huge Impact On the Oil Business (shipping and world economy too)
"Rich Rewards Await Top Oil Refiners as Ships Make Low Sulphur Switch Fuel":
This is a pretty big deal that's been on the horizon* for a while but hasn't gotten much notice outside the shipping industry and the specialist press until recently
Top Norwegian Oil Analyst Quitting DNB to Pursue 2020 Low Sulphur Fuel Rule Riches
Shipping: The Baltic and International Maritime Council (BIMCO) Warns That "The Container Shipping Industry May Face Bankruptcies if It Fails to Recover Extra Fuel Costs"
Shipping: CEO of Third Largest Fleet Says "We're All Going to Go Bust"
$13 billion revenue Mitsui O.S.K. Lines is number three in both fleet tonnage and number of ships with 857 across LNG carriers, dry bulk, crude and product tankers, car carriers and container ships, trailing only China Cosco and APM Maersk.
They move a lot of stuff and are a major player and that's what makes this comment so noteworthy....
And many, many more. Use the 'Search Blog' box if interested
