Overview

Demand at key marine fuel hubs advanced on both a yearly and quarterly basis in the last three months of 2023, according to the latest market survey of bunker sales volumes in 17 leading global locations, leaving the year's total sales slightly above 2022's level.

As in previous quarters, Ship & Bunker and consultancy 2050 Marine Energy surveyed bunker market participants around the world alongside official data where available and found an average jump of 0.4% in volumes in the fourth quarter from the same period of 2022. The year-on-year advance compares with a 1.1% year-on-year decline in the third quarter of 2023. Q4 volumes sequentially were 4.4% higher than in Q3.

That left demand at the 17 hubs overall at 138.1 million mt last year, up by 1.8% on the year and the most since 2021. The figure amounts to about 61% of the global demand total shown by the most recent official IMO data.

The main drivers of demand in the fourth quarter were two canal disruptions -- the reduction in capacity through the Panama Canal, caused by drought, and the diversions away from the Suez Canal because of attacks off the coast of Yemen.

"Climate change and global geopolitics had their impact on shipping, providing a better-than-expected quarter for the NY and US Gulf ports, said 2050 Marine Energy's Adrian Tolson.

"While container activity was shrinking most of the year, reduced capacity in Panama and Suez rerouting helped to provide stronger bunker demand."

Africa Gains From Suez Diversions

In the immediate aftermath of the launch of Houthi attacks on commercial shipping in Q4, ports around Africa had the most to gain from ships avoiding the Red Sea and Suez Canal.

A local source told Ship & Bunker that Mauritius was seeing 'crazy demand' in December.

"The Suez situation shifted all the volumes to Africa in general, and Port Louis specifically has seen crazy demand from all the liners," the source said.

Global bunkering firm Monjasa said it had seen a boost in West African sales.

"We have been in further contact with many of the largest container lines who are already rerouting vessels around Cape of Good Hope and into the West Africa region," Monjasa's Simone Piredda told Ship & Bunker.

"Most lately, we are also seeing tankers and bulkers rerouting and expect to receive more demand from these segments too."

South Africa should have also been a key beneficiary, but the shutdown of supply at Algoa Bay since mid-September came at the worst possible time, depriving the country of a much-needed boost to demand.

Further afield, Singapore, Rotterdam and Gibraltar have also shown signs of taking advantage of the Red Sea situation.

The question hanging over the market now is whether avoiding the Suez Canal becomes a more permanent state of affairs, if the US and its allies cannot restore maritime security around Yemen in the near term.

"It's likely that Suez disruption will continue to create higher demand in Q1 as well," Tolson said.

Fuel Quality

Leading fuel testing and maritime decarbonization advisory service, VPS, reported that for 2023 it issued 28 Bunker Alerts over the year, eight fewer than in 2022.

In all, 58% of 2023's Bunker Alerts were for VLSFO fuels, followed by 24% for MGO fuels and 14% for HSFO. The most common problematic parameter was Flash Point, accounting for 28% of the Bunker Alerts.

For VLSFO, the word's most popular fuel grade, sulphur was the most common off-specification parameter accounting for 26.6% of VLSFO off-specs, down from 31.5% in 2022. Pour Point was also a common off-specification parameter for VLSFOs, impacting 13.6% of VLSFOs tested by VPS.

For HSFO, viscosity and density were - as usual - the two most common off-spec parameters in 2023, with 42.5% of the off-spec attributed to viscosity and 34.3% to density. Water was the third most frequent HSFO off-specification parameter in 2023, with 10.5% off-spec level compared to 7.6% in 2022.

For MGO, Pour Point was the most common off-specification parameter in 2023, with 36.6% of MGO off-specs attributed to Pour Point. FAME contamination was the second most common MGO off-specification parameter accounting for 32.1% of all MGO off-specs. Notably, of samples tested by VPS, Singapore accounted for 15.9% of all MGO off-specifications, which was a significant increase on the 6.6% Singapore experienced in 2022.

Read VPS' 2023 Marine Bunker Fuels Review in full here: https://www.vpsveritas.com/knowledgecentre/articles/2023-marine-bunker-fuels-review

Methodology

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. Data is sourced from a combination of market participants and official records.

Individual Market Volumes & Commentary

Singapore

Q4 2023 xxx million mt
Q4 2022 xxx million mt
Q3 2023 xxx million mt
Year-on-year change x%
Quarter-on-quarter change x%