US-listed World Fuel Services has seen the income it receives from every tonne of bunkers it sells surge to at least an eight-year high in the wake of Russia’s invasion of Ukraine and the subsequent market volatility, 56% over the abnormally high levels seen during the IMO 2020 transition, reports Ship & Bunker.
Bunker sales volume reached 4.9 million mt
The company reported net profit of $52.7 million from its marine division in the second quarter of 2022, up by 128% from the previous quarter and by 998% from the same period a year earlier, it said in quarterly results released late on Thursday. The company’s marine gross profit of $78.2 million in the three-month period was the largest in its history, it said.
The firm’s bunker sales volume reached 4.9 million mt, up by 4% from the previous quarter and by 6.3% from the second quarter of 2021.
These volatile market pricing dynamics drove our spot-oriented marine business through record results.
That left its bunker margin at about $10.80/mt, up from $4.92/mt the previous quarter, from $1.05/mt a year earlier and the highest level since at least the third quarter of 2014, the earliest period for which data is available on its website.
The margin was 56% over the unusually high $6.93/mt level seen in the first quarter of 2020. During the uncertainty of the IMO 2020 transition concerns over the availability of the new VLSFO blends meant bunker suppliers were able to command significantly higher premiums than usual.
World Fuel Services is the world’s second-largest marine fuels firm after Bunker Holding.
Volatile Market Pays Dividends
In a call with investors Ira Birns, chief financial officer at WFS, said the recent turmoil in the bunker market was behind the strengthened profitability of the firm’s marine division.
“These volatile market pricing dynamics drove our spot-oriented marine business through record results,” Birns said.
He added, “During times of elevated fuel prices, constrained credit and rising interest rates, we become a more critically valued counterparty.”
“As evidenced in the past and then again during this past quarter, during times of elevated fuel prices, constrained credit and rising interest rates, we become a more critically valued counterparty, which increases our success rate and contributes to profitable volume growth.”
“For the third quarter, we expect marine results to again materially exceed the prior year. However, with bunker fuel prices somewhat lower quarter-to-date, it is unlikely that the third quarter will be as strong as the second quarter.”
900-Pound Gorilla
Birns went on to discuss the current bunker-price environment.
For a good part of the second quarter, in this crazy pricing environment, bunker fuel was, on average, $1,000/mt.
“You may remember when we had the IMO regulations kick in and people converting over to the more carbon-friendly fuel, that was trading somewhere under $500/mt, somewhere between $400 and $500.”
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Source: Ship & Bunker
