Low Sulfer Fuel Demand Set to Rise

New international rules – set to enter force in May 2005 – which require ships to burn fuel oil with a maximum sulfur content of 4.5 percent by May next year, and down to 1.5 a year later in certain world regions, will significantly boost the demand for low sulfur fuels, according to wire reports. The measures are set to increase shippers' demand for low sulfur fuel oil, while supplies may be insufficient to meet the anticipated pick-up in buying interest.

Front month forward paper prices for fuel oil with a low 1.5 percent sulfur content were at about $168.50 a ton on Tuesday, just $2 above 3.5 percent high sulfur fuel oil prices. The premium widens to $7 a ton for fourth-quarter paper, and to $10 by the third quarter of 2005.