- Singapore bunker market set to consolidate further amid fierce competition
- barging spread below typical $5-$8/mt breakeven level
- more demand for low sulfur bunkers needed for delivered business
Intense competition in Singapore delivered bunker market that has squeezed margins, particularly for IMO-complaint low sulfur bunker fuel, is limiting the ability of some players to operate profitably, says an article on SP Global.
Stiff competition
An uptick in the cost to secure ex-wharf supplies amid a firming upstream marine fuel 0.5%S cargo market, coupled with stiff competition to retain a slice of the delivered market, has led to a crunch in margins for some companies, especially those considered tier-2 in Singapore bunkering landscape, market sources said.
Not suitable for physical suppliers
The result has been that some medium-sized independent companies are considering scaling down operations or even exiting the market, one source said. The market is not good for physical suppliers, with even the big players being impacted by intense competition amid tepid demand, an industry analyst said.
Oil majors fare better
Oil majors and large integrated trading companies can usually fare relatively better in the delivered market due to control over their upstream and downstream supply chains, as their costs are lower than independent suppliers that have to factor in the ex-wharf cost component, a Singapore-based bunker supplier said.
Delivered bunker trade
The narrowing price spread between marine fuel 0.5%S bunker sold on a delivered basis and on an ex-wharf basis, or barging spread, has been cutting into margins, especially for smaller-sized sellers involved only in the delivered bunker trade, market sources said.
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Source: SP Global
