Several stakeholders in the bunkering value chain provided information on how their respective businesses were coping this year during a deep dive session at the 21st edition of Singapore International Bunkering Conference, also known as SIBCON 2020, on Tuesday (6 October).
Unni Einemo, Director & IMO Representative of the International Bunker Industry Association (IBIA), who was moderating the session SIBCON Deep Dive: Managing the Strategic and Operational Impact to Industry Post COVID-19 asked panellists how they expect demand for bunkers to be in the next six to 12 months.
She also asked the panel about how oil market dynamics caused by Covid-19 had influenced the choice of IMO 2020 compliant fuels in terms of price, availability and quality, including the use of scrubbers with HSFO, Covid-19 operational impacts, counterparty credit risk, and more.
“We have always been working on it and we knew the challenge when we knew we would be going for scrubbers,” said Jens Maul Jorgensen, Director of Bunkers at Oldendorff Carriers.
Jorgensen noted the German bulk carrier firm has been training its crew to operate scrubbers since more than a year ago and so far the company has not encountered any issues handling the equipment.
He added the company had already secured “a lot” of bunker contracts for high sulphur bunker fuel around the world, with the main bunkering port being Singapore.
In August 2019, Oldendorff Carriers further secured a 6,000 dwt bunker tanker dedicated to supplying its vessels with high sulphur bunker fuel at Singapore port.
“The operation has been very successful and we will still have that for years to come. So, with good and proactive planning, there has been no issues at all with availability of high sulphur bunker fuel,” he shared.
Though the price difference between high sulphur bunkers and IMO 2020 compliant fuels has not been substantial, Jorgensen said Oldendorff still managed to produce “good savings” when looking at the whole cost of the operation.
“If you do proper planning, then you’re also saving money. And if you’ve secure good client contracts, then you don’t get hit so much. I will say this is still looking very, very positive,” he explained.
“I would say the savings are there every day.”
“Our fleet and bunker pattern just didn’t really justify doing scrubbers and thereby having to source high sulphur bunker fuel. And I do acknowledge that it makes sense for certain segments to use scrubbers but for us it didn’t,” said Kasper Sørensen, Manager, Bunkers at Hafnia.
Sørensen shared that the company saw plenty of availability of IMO 2020 compliant marine fuel at the major bunkering hubs and even at smaller ports.
“And so I mean, availability wise it’s been quite good. And obviously, if everyone can see the economical side of things the price difference between high sulphur bunkers and its low sulphur equivalents is not huge at the moment,” he adds.
“Our strategy is to secure term contracts wherever we see opportunities, in order to create some sort of stability of the quality of the fuel that we’re getting.
“We also introduced risk limitation and procedures in order to ensure that we weren’t putting all our eggs in one basket.”
Sørensen gave examples and explained Hafnia does not fully stock a whole vessel with one batch of fuel, and the company is constantly monitoring the data of suppliers provided by fuel quality experts.
“I think in this period with the new fuels and in this new market you could argue it’s been a good opportunity mainly for bunkers suppliers to show their true colours and then for customers to find out what those colours really are,” he replied when asked about dealing with bunker claims.
“So it’s a chance to shine, and it’s a chance to fail. We’ve seen both approaches and luckily we’ve seen more of the ones on the positive side of things.”
Sørensen believed it would be wise for fuel buyers to establish stronger relationships, potentially even partnerships with bunker suppliers to be on the favourable side of a bunker claim.
“A lot of the time, bunker suppliers are just one part of the chain and they have to move the claim backwards towards cargo suppliers, and maybe even refiners,” he explains.
Total Marine Fuels Global Solutions (TMFGS)
“We have great data in Singapore because the Maritime and Port Authority of Singapore (MPA) produces the monthly bunker figures and we know bunker demand has stayed very robust in Singapore,” said Jesper Rosenkrans, Global Sales & Business Development Director at TMFGS.
“Maybe a slight increase, but certainly not a drop. Whereas in other parts of the world we’ve seen a pretty significant decrease in demand.”
Rosenkrans notes a trend which is more likely to stay is the pickup that the company has seen in Chinese bunkering volumes.
“Depending on the estimates and the source of estimates, bunker volume at Chinese ports is probably between 10 to 15%, up this year, despite the backdrop of Covid-19,” he shares.
“That’s a trend that we will probably see continuing, that the Zhoushan Ningbo area will remain strong. And we’re very excited that we’ve been able to enter that area together with our joint venture partner Zhejiang Energy Group, and we are already delivering bunkers through the TOTAL-ZEG JV entity, ZPMF.”
Moving forward, Rosenkrans believes Covid-19 has actually increased acceleration of interest in the newer types of marine fuels, such as liquefied natural gas (LNG) and biofuels.
“When preparing for IMO2020 we made the decision to focus on these cleaner marine fuels, and have intensified our strategic focus since,” he states.
“There has not been a shift in our business strategy because of Covid-19. We remain fully committed to cleaner marine fuels for now and for the future.”
“I think everybody was a little bit surprised in terms how fast things actually changed due to Covid-19,” shared Ulrich Hyldedahl Rasmussen, Vice President, Credit Risk Management at Sing Fuels.
“We are seeing bankers and we are seeing credit insurers pulling out. So I do foresee that the liquidity in the market in the future is going to change.”
The development means everyone will be reviewing their counterparties as a counterparty three months ago might not be in the same shape as now or in another three months’ time, he notes.
“So basically, the frequency of counterparty review is much more important now than ever before,” adds Rasmussen.
“I hope this will help drive change across the bunkering value chain for an increase in transparency.”
A series of SIBCON 2020 related articles have been earlier written by Manifold Times:
Related: SIBCON 2020: Singapore enters memorandum of cooperation on future fuels port network
Related: SIBCON 2020: Equatorial Marine Fuels provides view on local and global bunker markets post Covid-19
Related: SIBCON 2020: BIMCO Chief Shipping Analyst explains new business dynamics in bunker fuels sector
Related: Chairman of Technical Committee for Bunkering explains SS 660, TR 80; and cast an eye to the future
Related: SIBCON 2020: TR 48 reaps annual savings of at least SGD 80 million for bunkering sector
Related: SIBCON 2020: Singapore introduces new MFM bunkering standards SS 660 and TR 80
Related: SIBCON 2020: Powering Fuels of the Future, Driving towards Decarbonisation
Related: SIBCON 2020: Senior Minister highlights ‘quality resilience and sustainability’ for bunkering sector
Related: Infineum explains: ISO 8217:2017 should be viewed as a ‘minimum performance benchmark’ for VLSFOs
Related: Interview: Hafnia shares IMO 2020 preparations, promotes transparency for bunkering operations
Related: VPS: Shipowners face ‘tricky situation’ to balance VLSFO shelf life and wax appearance temperature
Related: VPS: Big data analysis reveals link between Covid-19 and spike in low flashpoint MGO off-spec cases
Related: Interview: Total Marine Fuels Global Solutions discusses sector growth, IMO 2020, and future plans
Related: SIBCON 2020: Evolution to a ‘completely different’ bunkering industry event, says organiser
Related: Singapore: SIBCON 2020 bunkering event to be hosted virtually
Photo credit: SIBCON 2020
Published: 9 October, 2020
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