How the IMO 2020 sulphur cap will affect asphalt markets

Author Argus

We recently spoke with asphalt industry experts to get their take on how the IMO 2020 sulphur cap could positively or negatively affect the industry.

The International Maritime Organization (IMO) will implement its global marine fuel sulphur cap on January 1, 2020—producers and consumers from the top to the bottom of the barrel will feel an impact. In the face of unknown price fluctuations, we spoke with asphalt industry experts and participants to hear their take on what the change means to their business needs. Positive or negative, the effects remain to be seen, but the industry is eagerly preparing for multiple possibilities. 

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 Like producers and consumers elsewhere in the refined products market, asphalt industry players are preparing for the January 1, 2020, implementation of the International Maritime Organization’s sulphur cap on marine fuels. With so many factors at play, it’s unclear how, exactly, this change will impact the industry. Argus asked asphalt industry experts to share their thoughts on how the IMO 2020 sulphur cap will affect the market.

Allen Smith, Principal Consultant, Asphalt Sourcing Alliance LLC: It has challenged and pushed the marketplace to look forward to understand what's going to impact them in the coming years. As IMO is implemented, it's going to change a lot of different decisions that we're making today and decisions yet to be made. So it's going to be a continuum of differences and changes.

Bill Lee, Terminal Manager, Century Asphalt: The IMO, so far, hasn't necessarily changed the market, but I think we foresee changes coming in the market. I think there's gonna be price pressure that'll reduce the price in asphalt and it will make more material available, at least in the short run and certainly change the makeup or constitution of that material.

Jim Musselman, Asphalt Performance Manager, CRH Americas Materials: Well, I think the changes that you'll see to IMO are gonna primarily, they'll be crude sources that are gonna have higher sulfur content and I think ultimately, they'll be a bigger supply of asphalt binder and I think that's probably a good thing. I think it's a good thing because ultimately, it kind of brings the price of asphalt binder down and from a contractor perspective, I think that's always a good thing.

Jay Hansen, Executive Vice President, National Asphalt Pavement Association (NAPA): We're recommending to the contractors, "Be in touch with your local supplier." They're the ones that are gonna know first how this issue is gonna affect them, and by extension, our industry, the asphalt pavement market. 

We hope this provided insight into what IMO 2020 may mean for your business. be sure look for our next post, where we revisit these experts to learn about the risks and opportunities they see in the asphalt market ahead of IMO 2020.

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