FEATURE: Bunker Holding Sees Peak Looming for Conventional Bunker Demand

IMO data show the global market has yet to return to 2019's demand level. Image Credit: Ship & Bunker / Data Credit: IMO

Bunker Holding CEO Keld Demant, heading the world's largest marine fuels firm, has raised the possibility that we have already reached peak conventional bunker demand.

Bunker markets across the world saw a retreat in conventional volumes in 2020 as the COVID-19 pandemic stymied shipping activity. Most markets have seen a recovery since then, but a return to 2019's global demand levels has yet to be achieved.

That recovery is being put off by the long-term downward pressure put on the fossil fuel bunker market by the decarbonisation agenda, both from ships switching to alternative fuels and by fuel-efficiency systems cutting energy use per ship. This trend may mean a peak in conventional demand may already have been seen, or will be approaching shortly, Demant said in a recent interview with Ship & Bunker.

"We will definitely see this decreasing over time," he said.

"It will unfortunately take quite some time. We've seen biofuels and LNG to a certain degree coming in, but it will take some time before we see ammonia and methanol coming in.

"The traditional fuels will decrease and the green will increase, and I think that the whole way business is done will change dramatically.

"Because today, you're asking for products, and in the future you're asking for solutions, because what you need is either different products, so a low-CO2 emission product, or you need carbon certificates to ensure that you'll comply with the new regulations."

The downward pressure from decarbonisation will be met by increased demand from growing trade, Demant added.

"I think that world trade will increase, which will keep the traditional fuels quite on the same level, or slightly decreasing; when it will peak is hard to say," he said.,

"But there's no doubt that a lot of things will happen between now and 2030.

"These things will impact traditional fuels in two ways; one is that there will be some alternatives, and the second will be that there will be a lot of attempts to reduce the fuel consumption per nautical mile by any means, to reduce CO2 emissions.

"So probably we have already seen the peak as of here, and we will see a decrease for the next many coming years."

Global Demand

Looking at global demand, the most recent official data from the IMO put the total for 2021 at 224.8 million mt, 10.7% higher than 2020 but still 1.8% lower than 2019's level.

Ship & Bunker and 2050 Marine Energy's quarterly survey shows a marked decline since 2019. Image Credit: Ship & Bunker / 2050 Marine Energy

Ship & Bunker and 2050 Marine Energy's quarterly survey of demand at 17 leading global locations shows a similar picture. Total demand in this survey reached 151.7 million mt in 2019, sank to 133.9 million mt in 2021, rallied to 138.5 million mt in 2021 and then slipped again to 135.6 million mt last year.

The highest quarterly total in this survey was 38.4 million mt, in Q3 2019, and the lowest 32 million mt, in Q3 2020, and the most recent figures for Q1 2023 had the quarterly total at 34.4 million mt.