Americas News
BLUE's Adrian Tolson Paints Grim Picture of US Gulf Bunker Market
Bunker industry veteran Adrian Tolson has described the 'depression' that hit the US Gulf market last year in the wake of the COVID-19 pandemic.
"The Gulf Coast suffered, the depression increased and the margins became tougher and tougher," Tolson, director of consultancy BLUE Insight, said at Petrospot's online Global Bunkering Summit on Tuesday.
The problems for the market started with both local supply and demand being thrown into disarray by the pandemic a year ago, Tolson explained.
"COVID had two impacts for the Gulf Coast -- it had a massive disruption to refining in local refineries, and it also caused demand destruction," he said.
"It saw a lot of oil come into the market as refiners tried to move oil that would normally not find its way into the bunker business.
"As things have adjusted beyond then, we started to see the impact of increased levels of commitment and increased levels of supply activity; what I mean by that is suppliers taking on barges, terminals and tanks.
"They now had assets that they needed to put to work, and were trying to compete in a market that had probably lost 20-30% of its demand."
The US Gulf was also hurt by its reliance on the tanker industry, rather than the more buoyant container industry, Tolson said.
"It was not uncommon to see the wholesale prices trading above the retail bunker prices, and this was an unheard-of scenario for the Gulf Coast," he said.
The situation has improved somewhat since last year's nadir, but has not yet returned to its pre-pandemic state, according to Tolson.
"We still have suppliers with considerable assets that need to be put to use; we still have that margin pressure," he said.
"What needs to happen is less suppliers in the market, pushing less volume and utilising less assets; it's a question, more than anything else, of who will blink first."
