The significant rise in global freight rates caused by tightening emission control regulation from the International Maritime Organization (IMO) started on January 1, 2020 to help reduce air pollution from global ships is putting high pressure on steel exporters.
In particular, the marine sector consumed about 3.8 million barrels of fuel each day in 2017, which made it responsible for 50 percent of the global demand. The bulk of this fuel was high sulfur fuel oil (HSFO), which produced sulfur emissions of between 1% m/m and 3.5% m/m when consumed by most shipping liners. Getting emission levels to under 0.5% m/m will require a large commitment from the shipping industry.
Nevertheless, as IMO 2020 announced, the ships can only use marine fuels with a sulfur content of not more than 0.5% when operating outside Emissions Control Areas (ECAs). The current sulphur content limit is 3.5%. ECAs include the Baltic Sea, the North Sea, the North American ECA (which includes most United States and Canadian coastlines), the US Caribbean ECA (which includes Puerto Rico and the US Virgin Islands, Fastmarkets has learned.
Consequently, fuel costs will rise by an estimated 25 percent (approximately $24 billion) in 2020 when the new IMO rules take effect. This is a high pressure on steel importers because they are already facing reduced demand and falling raw materials and steel prices.
In this position, clean fuel producers who are already capable of processing low-sulfur oil will have the benefits. However, the steel exporters have to find solution to have competitive prices and study freight rates from variety of shipping lines.
Maresos – an active team, we assert we can support you with the most competitive freight cost, also reliable material and the highest quality. If you want to to study information of this case or know more about global steel suppliers, please contact directly as bellows:
Ms. Elena – Export Executive
Mobile, Whatsapp, Viber : (+84) 978 17 66 35