- The COVID-19 pandemic saw plummeting rates in marine fuel demand around the world by up to 17%.
- As an effect, companies are contending with several factors and they may even be forced to quit the market.
- IBIA’s members forecast a 7%-17% drop in bunker fuel demand globally in 2020.
- Fuel oil demand to decline by 0.4 mbpd.
- However, Singapore remains unaffected with growth in marine fuel sales every month this year due to its resilience.
Global demand for marine fuels is expected to fall by up to 17% due to the impact of the coronavirus pandemic on world trade, setting the stage for more consolidation among bunker suppliers, reports Reuters.
Companies may have to quit the market
Unni Einemo, director of the International Bunker Industry Association (IBIA), said firms were contending with low demand, low margins, ample supplies, increased counterparty risk, and constrained access to capital.
“Because of that we might expect further consolidation through mergers and acquisitions or attrition,” Einemo told the virtual Platts APPEC 2020 conference, adding that some firms could be forced to quit the market.
Decline in demand
“Global bunker demand is expected to decrease significantly in 2020, even if it had held up quite well (in April and May),” Einemo said.
IBIA’s members forecast a 7%-17% drop in bunker fuel demand globally in 2020, she said.
Global marine fuel demand is estimated at about 300 million tonnes per annum, or about 5.2 million barrels per day (mbpd).
In its latest report released, the International Energy Agency said,
“fuel oil demand, which includes marine bunker as well as power generation and industrial uses, is forecast to decline by only 0.4 mbpd or 6.3% in 2020.”
By comparison, premium transport fuels which include jet fuel, diesel, and gasoline, are forecast to have lost about 7.4 mbpd, or 11.6%, of demand in 2020, according to the IEA.
Singapore remains unaffected
Singapore, by far the world’s top bunkering hub, saw year-on-year growth in marine fuel sales every month this year with the exception of May and June which contracted by just 2% each, official data showed.
Singapore’s resilience has a lot to do with it “having the widest variety of fuels on offer (and) it has become a preferred port because buyers are confident they are going to get the quality and quantity they are buying,” said Einemo.
But in other hubs like in the United Arab Emirates’ Fujairah, bunkering demand plummeted as the spreading coronavirus slowed shipping activity.
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Source: Reuters
