Overview

Demand at key marine fuel hubs slipped on both a yearly and quarterly basis in the first three months of 2022, according to the latest market survey of bunker sales volumes in 17 leading global locations, as COVID-19 restrictions in Asia and the initial impact of the Ukraine crisis left markets in turmoil.

As in previous quarters, Ship & Bunker and consultancy BLUE Insight surveyed bunker market participants around the world alongside official data where available and found an average drop of 2.6% in volumes in the first quarter from the same period of 2021. The year-on-year decline compares with a 5.7% year-on-year gain in the fourth quarter of 2021. Q1 volumes sequentially were 3.6% lower than in Q4 2021.

"We're starting to see some shifting in demand patterns around the globe as a result of the Russian invasion of Ukraine," Adrian Tolson, director of BLUE Insight, told Ship & Bunker.

"It's not as predictable in some locations -- notably the ARA hub and Singapore -- as one might expect.

"Severe backwardation in markets is obviously favouring those locations that are not as dependent on cargo movement for supply."

Unpredictable Russia Impact

The biggest complication facing the market has undoubtedly been the fallout from the Russian invasion of Ukraine, launched in full on February 24.

A wide range of shipping and bunker companies immediately stopped work at Russian ports. Most top bunker companies are now refusing to refuel Russian-affiliated ships, and a smaller group are declining to deal in Russian-origin oil altogether.

The initial impact appeared surprisingly to favour Northwest European over Asia-Pacific bunker ports, with Singapore's Q1 bunker sales slumping to a 6 1/2-year low while Rotterdam's jumped to a seven-year high.

COVID-19 may explain some of the weakness in Asian demand, with Shanghai still in lockdown in the first quarter and shipping in the region heavily disrupted.

Singapore was also facing an HSFO contamination crisis that damaged as many as 80 ships in February and March, although this was not publicly revealed until March 11.

Improving Margins, Shaky Credit Outlook

The most obvious impact of the Russia crisis has been to drive a surge in bunker prices since late February. Ship & Bunker's G20 Index of VLSFO prices at 20 leading bunkering ports jumped to a record of $1,040.50/mt on March 9 that was not beaten again until June 3.

That rise in prices should drive healthy profit margins for the bunker industry, but will also tighten the availability of the credit that the industry relies upon.

Last week Søren Høll, CEO of marine fuels trader and broker KPI OceanConnect, said the firm had seen good traction at the start of 2022, and had a positive outlook for the rest of the year.

"We're quite confident that we can keep up the momentum here," he said.

Meanwhile US-listed World Fuel Services reported seeing the highest bunker margins since the IMO 2020 transition in Q1, with sales volumes up by 10.4% from Q1 2021 but down by 3.4% from Q4 2021.

Methodology

As with the previous surveys the areas covered by the survey are Singapore, the Amsterdam-Rotterdam-Antwerp (ARA) hub, Fujairah, the US Gulf, South Korea, Russia, the Gibraltar Strait, Hong Kong, Panama, Zhoushan, Japan, New York, West Africa, South Africa, the Canary Islands, Los Angeles/Long Beach and Turkey.

Together these areas saw about 139 million mt of demand in 2021, meaning they cover more than 60% of current global demand.

Only conventional bunker sales are noted by this survey, with LNG, biofuels and other alternatives currently excluded.

Singapore

• Q1 2022 XXX million mt
• Q1 2021 XXX million mt
• Q4 2021 XXX million mt
• Year-on-year change XXX%
• Quarter-on-quarter change XXX%

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ARA 

• Q1 2022 XXX million mt
• Q1 2021 XXX million mt
• Q4 2021 XXX million mt
• Year-on-year change XXX%
• Quarter-on-quarter change XXX%

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Gibraltar Strait

• Q1 2022 XXX million mt
• Q1 2021 XXX million mt
• Q4 2021 XXX million mt
• Year-on-year change XXX%
• Quarter-on-quarter change XXX%

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Fujairah

• Q1 2022 XXX million mt
• Q1 2021 XXX million mt
• Q4 2021 XXX million mt
• Year-on-year change XXX%
• Quarter-on-quarter change XXX%

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US Gulf

• Q1 2022 XXX million mt
• Q1 2021 XXX million mt
• Q4 2021 XXX million mt
• Year-on-year change XXX%
• Quarter-on-quarter change XXX%

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South Korea

• Q1 2022 XXX million mt
• Q1 2021 XXX million mt
• Q4 2021 XXX million mt
• Year-on-year change XXX%
• Quarter-on-quarter change XXX%

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Russia

• Q1 2022 XXX million mt
• Q1 2021 XXX million mt
• Q4 2021 XXX million mt
• Year-on-year change XXX%
• Quarter-on-quarter change XXX%

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Hong Kong

• Q1 2022 XXX million mt
• Q1 2021 XXX million mt
• Q4 2021 XXX million mt
• Year-on-year change XXX%
• Quarter-on-quarter change XXX%

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Panama

• Q1 2022 XXX million mt
• Q1 2021 XXX million mt
• Q4 2021 XXX million mt
• Year-on-year change XXX%
• Quarter-on-quarter change XXX%

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Zhoushan

• Q1 2022 XXX million mt
• Q1 2021 XXX million mt
• Q4 2021 XXX million mt
• Year-on-year change XXX%
• Quarter-on-quarter change XXX%

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Japan

• Q1 2022 XXX million mt
• Q1 2021 XXX million mt
• Q4 2021 XXX million mt
• Year-on-year change XXX%
• Quarter-on-quarter change XXX%

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New York

• Q1 2022 XXX million mt
• Q1 2021 XXX million mt
• Q4 2021 XXX million mt
• Year-on-year change XXX%
• Quarter-on-quarter change XXX%

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LA/Long Beach

• Q1 2022 XXX million mt
• Q1 2021 XXX million mt
• Q4 2021 XXX million mt
• Year-on-year change XXX%
• Quarter-on-quarter change XXX%

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West Africa

• Q1 2022 XXX million mt
• Q1 2021 XXX million mt
• Q4 2021 XXX million mt
• Year-on-year change XXX%
• Quarter-on-quarter change XXX%

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Canary Islands

• Q1 2022 XXX million mt
• Q1 2021 XXX million mt
• Q4 2021 XXX million mt
• Year-on-year change XXX%
• Quarter-on-quarter change XXX%

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Turkey

• Q1 2022 XXX million mt
• Q1 2021 XXX million mt
• Q4 2021 XXX million mt
• Year-on-year change XXX%
• Quarter-on-quarter change XXX%

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South Africa

• Q1 2022 XXX million mt
• Q1 2021 XXX million mt
• Q4 2021 XXX million mt
• Year-on-year change XXX%
• Quarter-on-quarter change XXX%

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