Bleak Outlook for Global Bunker Demand

Suppliers will have to wait until bunker demand picks up.

Industry players are predicting it will be 2014 before the global demand for bunkers recovers from "near three-year lows," according to a report by Reuters.

"We are looking at 18 to 24 months before larger demand starts coming back," Dan Bunkering chief executive Henrik Zederkof was quoted as saying.

"Right now, (ship operators) are in a position where every day they try their best to see if they can just meet daily costs. I'm quite worried about them because we're partners for many years."

One container shipping executive said they thought the recovery would not happen until 2015.

Figures release earlier this week by Maritime and Port Authority of Singapore (MPA) showed bunker sales at the port during September dropped for a second consecutive month putting year-to-date sales essentially on par with the same period in 2011, whereas 2011 annual sales grew 5.63% over 2010's sales volume for all products.

A slowing of economic growth in China, and the ongoing financial issues in Europe were cited as the main reason for the slump, but the report said bunker demand has also fallen as ship operators cut costs and save energy.

"With shipping lines adopting slow steaming to cut costs and manage the oversupply in capacity, bunker suppliers are finding their bottom lines affected as well," said Lui Tuck Yew, Singapore's minister for transport.

Last month, NYK line President Yasumi Kudo said that "generally speaking, reducing the steaming speed of 8,000 twenty-foot equivalent unit (TEU) containerships by 20% more than halves fuel consumption volume."

Discussing the listing three fuel oil single swap contracts earlier this week, Cleartrade Exchange said that "we can expect bunker costs to be the greatest burden for the shipping industry for the foreseeable future."