THE requirement that ships docking at the Chinese ports of Shanghai, Ningbo and Zhoushan to use fuel with a sulphur content not exceeding 0.5 per cent starting from October 1 may firm up freight rates in Asia.
The new low sulphur rules at the three ports applies to vessels entering the Yangtze River Delta emission control area.
The regulation is in line with the International Maritime Organisation's (IMO) new global 0.5 per cent sulphur cap in marine fuel that will come into effect on January 1, 2020.
The adoption of low sulphur content fuel is expected to raise operational costs of shipowners, which is likely to result in firmer-than-usual freight rates to the major Chinese ports, reported London's Independent Chemical Information Service (ICIS).
'Low sulphur fuel usually costs more, so it's definitely likely that shipowners have already raised their freight for these routes,' a shipping analyst said.
Strong crude futures markets due to supply concerns ahead of the US sanctions on Iran would also lead to higher costs of bunker fuel, which could nudge up freight rates.
Other market participants, however, noted that a heavy turnaround schedule at petrochemical plants in Asia in the fourth quarter would translate to slow traffic of spot shipments on most routes and stall any increase in freights.
'With petrochemical trade slower in the second half of the year compared with the first half of the year, tonnage space is likely to be readily available,' a shipbroker said.
The new low sulphur rules at the three ports applies to vessels entering the Yangtze River Delta emission control area.
The regulation is in line with the International Maritime Organisation's (IMO) new global 0.5 per cent sulphur cap in marine fuel that will come into effect on January 1, 2020.
The adoption of low sulphur content fuel is expected to raise operational costs of shipowners, which is likely to result in firmer-than-usual freight rates to the major Chinese ports, reported London's Independent Chemical Information Service (ICIS).
'Low sulphur fuel usually costs more, so it's definitely likely that shipowners have already raised their freight for these routes,' a shipping analyst said.
Strong crude futures markets due to supply concerns ahead of the US sanctions on Iran would also lead to higher costs of bunker fuel, which could nudge up freight rates.
Other market participants, however, noted that a heavy turnaround schedule at petrochemical plants in Asia in the fourth quarter would translate to slow traffic of spot shipments on most routes and stall any increase in freights.
'With petrochemical trade slower in the second half of the year compared with the first half of the year, tonnage space is likely to be readily available,' a shipbroker said.