- The demand for bio-bunkers in Singapore, the world’s largest bunkering port, is poised for continuous growth throughout 2024.
- This surge follows a remarkable increase in Singapore’s overall bunker fuel sales, reaching a record 51.8 million mt in 2023.
- Within this, bio-bunker sales experienced a substantial jump, soaring to 518,000 mt from 140,200 mt in 2022, according to data from the Maritime and Port Authority of Singapore.
Driving UCOME Consumption
A significant driver of this surge in demand is the use of used cooking oil methyl ester (UCOME) in bunker fuels blending. The Platts-assessed UCOME FOB Straits averaged $1,157.73/mt in 2023, showcasing a notable uptick. The B24 bio-bunkers, constituting 24% UCOME, had an average price of $748.91 in 2023. The bio-bunker boom is anticipated to propel UCOME consumption, aligning with the shipping industry’s commitment to cleaner and more sustainable fuel alternatives.
Decarbonization Initiatives and Regulatory Landscape
The increased adoption of bio-bunkers is in line with global efforts towards decarbonizing the shipping sector. Major shipping companies, including industry giants like Maersk and Hapag-Lloyd, are actively incorporating biofuels into their fleets as part of their net-zero emissions targets by 2050. Regulatory measures such as the EU’s Emissions Trading System and the FuelEU maritime initiative further emphasize the industry’s shift towards cleaner energy sources.
China’s UCOME Export Challenges and Strategic Shift
China’s UCOME exports have faced challenges due to investigations initiated by the European Commission, leading to potential fraud and antidumping measures. In response, Chinese UCOME producers are strategically redirecting their focus to Singapore’s burgeoning bio-bunker market. This strategic shift has resulted in an increased import of UCOME from China to Singapore, impacting regional UCOME prices.
Impact on Regional UCOME Prices
The influx of cost-effective Chinese UCOME into the Singaporean market has presented challenges for regional UCOME suppliers. Platts assessed UCOME FOB China at $935/mt on Jan. 25, marking a decline from the all-time high of $1,650/mt on Aug. 15, 2022. The increased availability of Chinese UCOME in the market has exerted downward pressure on regional UCOME prices, affecting the overall dynamics of the UCOME market in the region.
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Source: SP Global
