Asia/Pacific News
Bunker One: More Transparency in Singapore Means More Pressure on Margins
Bunker One is among the many players who say the January 1, 2017 introduction of mandatory mass flow meters (MFMs) for MFO bunkering in Singapore has been a positive move for the market.
A notable effect of the new measure is that it has made the market more transparent, but this in turn has put pressure on margins and volume turnarounds in the world's biggest bunkering port, according to Peter Zachariassen, Global Director Physical of Bunker Holding's Bunker One.
"Banks and cargo suppliers have naturally turned even more conservative on credit in the aftermath of these events."
The development has prompted some players to expand their barge fleet. "Some by more than 200% to win competition," Zachariassen notes.
Others have felt there is now too much pressure in the market and chosen to exit, with the January departure of former top 20 physical supplier Aegean Marine Petroleum Network Inc. [NYSE: ANW] (Aegean) a case in point.
Aegean, a player in Singapore for some 11 years, made the decision due to what it said were "extremely competitive" conditions in the country.
Harley Marine Asia Pte Ltd, meanwhile, ended their physical supply operations last month after just two years in the port city.
Today there are 52 accredited suppliers in Singapore. In contrast, data from the Maritime and Port Authority of Singapore (MPA) shows that in February 2013 there were 72 licensed suppliers in the port.
One thing that has not slowed in this time is the appetite for lifting bunkers in Singapore, with sales volumes over the five-year period having jumped some 19% to a record 50 million mt last year.
Despite the apparent pressures, Zachariassen says Bunker One has no intention of leaving the world's biggest bunker market: "Bunker One has one of its most important office locations in Singapore, and even though many physical trading houses have recently left Singapore, we stay!"
"As being the largest market in the world, it makes good sense that almost any supply, trading and broking house is present in this fantastic city."
