World News
Low Prices Will See Bunker Demand Rise in Medium Term
Low prices will stoke rising bunker consumption, and therefore demand, over the coming one to five years, according to a Reuters market analyst.
"Over the last decade, fuel demand has actually been restrained by the high cost of residual fuel oil and marine diesel, which encouraged many shipping lines to adopt practices such as slow steaming," wrote John Kemp in a Reuters column.
"With lower fuel costs, however, container ships, oil tankers and bulk carriers are speeding up to cut total voyaging costs - sacrificing more fuel consumption for shorter journey times and faster turnarounds.
"In the medium term, over a one to five-year period, the global shipping industry could be a significant source of extra petroleum demand if bunker costs remain low."
While demand growth will come from across the major shipping industry segments, Kemp pointed to container shipping in particular as an area for growing demand.
"The container shipping sector has been one of the fastest growing and accounts for a large share of increased fuel consumption."
Kemp added that cheaper bunkers "acts as a stimulus to large parts of the global economy," echoing the predictions of some others that global trade and shipping should see a medium term boost from low oil prices.
In January, DP World said it would double its 2015 investment programme as it anticipated a rise in global shipping activity, boosted by low oil prices.
Key Bunker Prices More
| VLSFO | MGO | |||
|---|---|---|---|---|
| $/mt | +/- | $/mt | +/- | |
| Singapore | 647.00 | 6.00 | 762.00 | 5.50 |
| Rotterdam | 599.00 | 1.00 | 751.00 | 0.50 |
| Houston | 618.00 | 11.50 | 802.50 | 6.50 |
| Fujairah | 642.00 | 5.50 | 883.50 | 5.50 |
| Global 20 Ports Average | 661.50 | 3.50 | 859.00 | 5.00 |
| Global 4 Ports Average | 629.50 | 1.00 | 799.50 | 1.50 |
| Global Average Bunker Price | 719.00 | 3.50 | 915.00 | 7.50 |
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