As it is broadly discussed in the industry, the IMO 2020 regulation is expected to increase prices of compliant fuels. Subsequently, it is believed that the higher prices will put more financial pressure on buyers’ shoulders. Even if they finally pass the additional cost to their charterers/cargo interests, ship operators might face cash flow and liquidity issues, which can make them struggle.
Due to this reason, Bomin Group has recently announced that it has decided to make its credit risk approval requirements stricter in an effort to sell bunkers only to top rated buyers and avoid those who might suffer from the increased prices.
The Managing Director of Bomin Group, Jan Christensen, notes that It is crystal clear to everyone that the enforcement of the lower sulfur limits in 2020 brings both challenges and unique opportunities. Since long time the industry is aware that IMO 2020 will increase fuel prices and this will affect the industry’s financing costs, sales volumes and existing credit lines, he added.
According to Christensen, “higher costs for buyers will have a significant impact on their financial performance and unfortunately this will be critical for those who are perhaps already struggling in weak markets or lack access to increased capital. Bomin therefore made a very conscious decision to only sell to first-rate, prompt-paying customers with whom we have complete confidence and are proud to serve them.”
Despite the fact that compliant fuel prices might be much more expensive next year, as compared with today’s HSFO prices, Bomin says that its decision is not related with the compliance strategy that ship operators will follow (scrubbers or VLSFO). In a previous interview with Paul Millar, Bomin’s Group Credit Manager, he noted that no compliance strategy is riskier than the other.
If their financial condition is sound, they will get a credit line irrespective of what is the compliance strategy that they follow, Millar concluded. In company’s view, ship operators that will install scrubbers do not seem to be in a better position. Even if they are going to buy cheaper fuels, the repayment of the investment cost might hit their financial results in a similar way.
From its side, Bomin, in order to meet the challenges and manage the uncertainties of the IMO 2020 has, during the last year, enforced a restructuring plan with scaling its operations down. The group’s managing director explained that “this way the company ensures it is sustainable to provide the quality of products and services that Owners and Charterers are looking for”.
In the meantime, the company has announced that for the post-2020 market it will offer compliant 0.50% fuel as well as marine gas oil and HSFO for the vessels equipped with scrubbers.