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Consolidation expected in marine fuel industry as pandemic cuts global demand
An anticipated 7 to 17 percent drop in global demand for marine fuel is expected to lead to further mergers and acquisitions or attrition in the industry, says International Bunker Industry Association (IBIA) director, Unni Einemo.
Firms have to deal with low demand, low margins, increased counterparty risk, and constrained access to capital.
The International Energy Agency expects fuel oil demand, which includes marine bunker and power generation and industrial uses, to decline by 0.4 million barrels per day (mbpd), or 6.3 percent in 2020.
In contrast, premium transport fuels, such as jet fuel, diesel, and gasoline, are forecasted to have lost about 7.4 mbpd, or 11.6 percent, of demand in 2020.
Most bunkering markets are seeing a big year-on-year contraction, with some between 30 to 40 percent, notes Einemo, adding that Singapore is among the least affected markets.
Singapore, the world’s top bunkering hub, enjoyed year-on-year growth in marine fuel sales every month except May and June, with each contracting by 2 percent.
Singapore has the widest variety of fuels on offer and is known to provide the right quality and quantity.
But in other hubs such as in the UAE’s Fujairah, bunkering demand plummeted due to the impact of the pandemic on shipping activity.