Rising cargo prices for fuel oil and stiff competition in the delivered bunker market is squeezing margins for Singapore bunker players.
Some smaller independents may scale down operations as a result, according to price reporting agency SP Global Platts.
Tier-2 bunkering companies are seen to be the most vulnerable.
"The narrowing price spread between marine fuel 0.5% S bunker sold on a delivered basis and on an ex-wharf basis has been cutting into margins, especially for smaller-sized sellers involved only in the delivered bunker trade," market sources were cited as saying in the report.
Platts data shows that the spread between ex-wharf and delivered bunker prices has lost around $2 per metric tonne (pmt) in September over July and August to be just under $4 pmt.
A margin of $5 pmt is usually considered by market players to be the minimum to cover operational costs.
