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Argus Media: Bunker demand to fall by 8% in 2Q- IEA

18 May 2020

Erik Hoffmann of global energy and commodity price reporting agency Argus Media on Thursday (14 May) published an article on the IEA’s predictions of the bunker fuel market in view of global lockdowns due to the COVID-19 pandemic: 

Global bunker demand will fall by 8% year on year in the second quarter as Covid-19 related lockdowns result in fewer trade movements and almost no passenger travel, according to the IEA.

The Paris-based agency forecasts demand from cruise ships will fall by 90%, from container ships by 12%, and from dry bulkers by 2%. It forecasts demand from oil and chemical tankers will be broadly unchanged.

The IEA said demand from all vessel types will drop by 5% this year, with 6% and 3% year-on-year falls in the third and fourth quarters.

Cruise ships account for only around 6% of global bunker demand, but the sector was hardest hit by Covid-19 lockdowns. Three of the biggest cruise lines took their ships out of operation in March for around 30 days. This weighed on high-sulphur fuel oil (HSFO) demand in particular, as about 40-65% of cruise ships are fitted with exhaust scrubbers.

The IEA said the cruise industry will recover marginally in the third quarter, when bunker demand from the sector will be down by around 83% from a year earlier. The drop will be 60% in the fourth quarter.

Demand from container ships, which burn 14% of bunker fuels according to the IEA, will also recover in the third and fourth quarter to drops of 8% and 4%, respectively. Container ships have increasingly sailed with empty containers since parts of China started to lock down from late January, and the rest of the world from mid-March. Some voyages have also been cancelled, and some ports skipped.

Shipping association Bimco said 2.2mn twenty-foot equivalent unit (TEU) were idle in April, around 9% of the global fleet. Maersk, the world’s biggest bunker consumer, said its fuel consumption fell by 7.4% on the year in the first quarter.

Demand for dry bulk ships, which make up 29% of global bunker demand, have also been under pressure from the global economic slowdown. The IEA expects the 2% year-on year bunker demand drop from sector to continue in the third quarter, and then recover in the fourth quarter to the same level as a year before.

The IEA expects bunker demand from oil and chemical tankers, which make up 21% of global consumption, to be flat in the second, third and fourth quarters. Crude oil and products tanker demand rose in April, largely because of demand for floating storage and higher exports from the Middle East.

Bunker sales in Singapore, the world’s biggest bunkering port, fell by 5% in April from March.

Photo credit: Argus Media
Published: 18 May, 2020

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