2013: Good for Bunker Suppliers, Bad for Shipping

Aegean is poised to profit in 2013, according to analysts

Growing world trade will bring demand for fuel oil to its highest point ever in 2013, driving strong profits for bunker suppliers, but a glut of ships will keep conditions difficult for shipping companies, according to a Bloomberg analysis.

Demand for bunker fuel will rise 2.2 percent to 3.37 million barrels per day (bpd) this year, according to research company JBC Energy GmbH, and the average price will rise to an all-time high of $690 per metric tonne, according to industry consultant McQuilling Services LLC.

These trends will be good news for bunker suppliers like Aegean Marine Petroleum Network Inc. [NYSE:ANW] (Aegean), which analysts surveyed by Bloomberg predict will see its shares rise 75 percent in 12 months.

Analysts also predict that Aegean will report an 81 percent gain in profit to $48.5 million this year.

World trade will grow 4.5 percent this year, up from 3.2 percent in 2012, according to the International Monetary Fund, but the world fleet—already the biggest ever—will expand by 5 percent in 2013, according to shipbroker Clarkson Plc., and shipping lines could adopt faster speeds, making the numbers even more difficult.

"If world trade speeds up, the fleet speeds up, bunkers go up and vessel supply goes up," said Simon Newman, head of tanker research at ICAP Shipping International Ltd.

Some in the shipping industry, including Andreas Sohmen-Pao, CEO of tanker operator BW Maritime, have urged that shipowners use caution in ordering new ships to avoid contributing to excess capacity, but Braemer Seascope predicted in October that 2013 would be biggest year ever for containership deliveries.

A Reuters survey of analysts last month predicted that oil prices will slip slightly in 2013 because of growing supply.