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Bunker fuel sales dipped 2% at Singapore port in May, experts provide opinion and forecast

15 Jun 2020

Bunker sales at Singapore port fell by 2.0% on year in May 2020, according to data released by the Maritime and Port Authority of Singapore (MPA) on Friday (12 June).

The dip in marine fuel sales was aligned with the expectation of several industry players who believed COVID-19 (Coronavirus Disease 2019) has finally ‘caught up’ with market demand.

“As mentioned in my earlier commentary, May was looking to be a quieter month compared to April,” explained Dennis Ho, Director & Founder of local marine fuel consultancy Azure Strategic Resources.

“Prices in April, which led to ship operators/owners loading up on their bunkers, encountered a sharp correction in the later part of the month. This was followed by a quick recovery of prices in May, with Gasoil MOPS clawing back about 40% from the lows of April.

“These two factors combined probably led to a lower bunker sales volume for the Singapore market in May.  However, if taken into context of the current global economic situation, I would say the bunker market has been quite resilient.”

Ho noted the wider maritime market being buoyed by optimism as countries begin to relax their strict lockdown measures due to COVID-19.

“Positive trade figures from China also brought hope of a possible V-shape recovery, while other financial markets were also bullish,” he said.

“The expectation of OPEC+ to extend their production cuts, which was a development during the end of May, provided more bullish news to the market.”

Ho expects market prices to be volatile moving forward to June.

“The Singapore bunker market will face price competition with regional ports (i.e. Port Klang, Hong Kong and South Korea),” he forecasts.

“Additionally, ex-wharf discounts over cargo prices in June will likely be lower than May due to ample supplies and weaker demand.

“The continued spat between US and China will also weigh on the broader market. Expectations of a prolonged economic downturn will look bearish for the market if mortality continues to increase in the second wave of COVID-19.”

Simon Neo, Executive Director at marine fuels consultancy SDE International, says the drop in Singapore’s bunkering volume during May “is not unexpected”.

“Many major bunker ports around the world also saw a decline in volume [in May]. Less cargoes are being shipped globally due to the showdown in trade and closure of factories caused by COVID-19 and the continued spat between USA and China,” he notes.

“This was evident in the number of vessel arrivals to Singapore for May [-43.7% y.o.y.]. Shipping is going through a difficult year, while banks’ tightening of credit facilities have also not helped and most likely this will remain the case going forward.

“The tightening of credit facilities not only affects the shipowners but also the bunker industry as a whole.

“Physical suppliers usually give shipowners or charterers open credit for 30 days after bunkers are delivered to the vessel. With the tightening of credit facilities from the banks to physical suppliers, the group will gradually not be able to supply more volume.

“The industry is facing a slowdown in the whole bunker sector as countries try to open up their trades cautiously to prevent a second wave of COVID-19 into their countries, not forgetting people are buying lesser, going out lesser and travelling much lesser now.

“As the saying goes without people buying things, manufacturing will slow, trade will also slow and shipping movements slows down. It’s a whole chain of reaction.”

Singapore bunker volume

A total 3.92 million metric tonnes (mt) (exact: 3,925,000 mt) of bunkers was sold at the port in May, less than 4.00 million mt (exact: 4,006,500 mt) posted during May 2019.

Deliveries of 500 centistokes (cSt), 380 cSt and 180 cSt grades in May 2020 (against on year), were respectively 100,100 mt (-86.8% from 759,100 mt), 685,200 mt (-75.5% from 2.79 million mt), while 180 cSt product recorded no sales (-100% from 19,600 mt).

Low sulphur 500 cSt, 380 cSt and 180 cSt products respectively recorded 3.5 million mt sales (compared to zero), 1.92 million mt (significantly up from 19,700 mt), and 76,600 mt (+92% from 39,900 mt).

The latest data introduced new categories, namely low sulphur 100 cSt, and ULSFO which respectively recorded 657,200 mt and 58,400 mt of sales in February.

Low sulphur marine gas oil (LS MGO) sales were posted at 351,400 mt (+65.6% from 212,000 mt) and MGO at 72,100 mt (-5.0% from 75,900 mt).

Related: Marine fuel consultants explain Singapore’s 10.8% on year bunker sales increase in April
RelatedSingapore: March 2020 bunker fuel sales rise 5.7% on year
RelatedSingapore: February 2020 bunker sales volume up 2.5% on year
Related: Singapore: January 2020 bunker sales volume up 7.5% on year

 

Photo credit: Manifold Times
Published: 15 June, 2020

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