Dan Bunkering were among those to host valuable networking events during IE Week. File Image. Image Credit: Ship & Bunker

• Market under pressure from low bunker prices, increased competition, extended credit terms
• Worry that some firms are running out of capital and will go out of business
• Some physical players enjoying a bright start to 2026 with increased volumes
• Current climate an opportunity for some to expand on favourable terms
• Spot biofuel demand reported as weak
• IMO NZF & green issues off the agenda for now

If conversations across last week's IE Week networking events are any indication, the bunker industry has started the year with a notable sense of apprehension.

Sources speaking to Ship & Bunker last week reported increasingly difficult trading conditions, with market optimists outnumbered by those voicing concern over flat demand, intensifying competition, and thinning margins.

Many felt sentiment was at its most negative in several years.

Above all, there was speculation that a growing number of players are running out of capital - or already have - raising fears that not only will some firms will go out of business but we will witness a significant default event this year with repercussions that could ripple across the market.

"It's all getting a little 'Franz Ferdinand' out there," one source said.

"I can't see a good outcome."

But that outlook was certainly not universal, with some players reporting volumes this year had already bounced back in their relevant markets, and in any event their business model was robust enough to weather any downturn.

Others, who said they were in a strong cash position, viewed the current environment as an attractive opportunity to expand on favourable terms.

Trading Conditions

Over the past year the industry has seen a notable influx of smaller firms with aggressive trading strategies, several of which have since moved to expand their operations.

These firms are said to be intensifying margin pressure by running lean operations with limited credit insurance, allowing them to undercut more established players.

Bunker prices are also low, with Ship & Bunker's G20-VLSFO Index of prices at 20 global hubs ending 2025 down by 20.4% from its level a year earlier.

Low bunker prices can benefit smaller firms in a number of ways, not least of which being that fixed credit line limits mean falling bunker prices translate into greater trading capacity.

This in itself is nothing the industry has not faced before, and the market should rearrange itself in time to favour those who can consistently supply at the lowest price while providing good service. 

But increased competition is also prompting an easing of credit conditions, with some arguing this may cause problems down the line for a wider section of the industry.

Payment for bunker fuel is typically made up to 30 days after delivery, but sources told Ship & Bunker that 60-day terms are now seen much more often, and some companies are going as far as 90 days or more.

While these extended terms are more often seen coming from smaller players, some sources reported that to remain competitive even larger traders have been tempted into such terms.

Extended terms can be justified in certain circumstances — for example, where payment is structured to follow the completion of a voyage.

However, several sources told Ship & Bunker that requests for terms of up to three months have become more common even for relatively short voyages, making such arrangements look increasingly like free financing for parts of the shipping industry.

"There's definitely some dry bulk shipping companies out there whose business model now relies on getting these kinds of extended terms," one trader said.

Adding to this problem is that even with extended credit terms, many shipping companies are also failing to pay on time.

A maritime lawyer told Ship & Bunker that in January his company had seen a significant increase in late payment cases.

But not all of these delayed payments are resulting in legal action. A credit manager told Ship & Bunker shipping companies failing to pay on time are increasingly being allowed to do so by their bunker providers.

Green Debate Off the Agenda - For Now

At the end of last year the IMO's NZF delay dominated discussions at the IBIA Annual Convention in Hong Kong, but by IE Week the conversation seemed to have moved on.

Indeed, even IMO Secretary General Arsenio Dominguez, in his opening remarks at the annual IBIA dinner did not touch directly on the UN body's delayed net-zero framework.

"To tell you what the future is going to look like: It's positive, and we have to remain positive," Dominguez said.

"Things may be interesting out there, but that doesn't mean the shipping and bunkering industries are not progressive."

With no clear information about global decarbonisation regulation likely to emerge at the very least until the next MEPC meeting in April, and with more immediate problems to address in the conventional fuels business, the bunker industry is focusing on how to cope with its current market rather than imagining what the future marine energy landscape will look like.

This effect can also be seen in the market, where many sources reported demand for biofuel bunker blends was sluggish at best.

A reliable spot market for these blends is still not appearing at all but the largest hubs in Europe and Asia, and suppliers are reluctant to commit storage capacity and other infrastructure to this market without guaranteed minimum demand levels.

Tombstones on the Horizon

More than one market participant suggested that should the current market conditions persist, it could be enough to put some firms out of business.

"Most can get through a lean year, but not everyone will be able to survive two," the source said.

"I think there will be some tombstones this year."

Even some of the leading names in the industry are feeling under pressure, one senior executive said.

"I think there's a lot of the biggest companies not doing as well as they should be right now," the executive said.

"It's possible that could bring some problems down the line."

Several sources approached Ship & Bunker to discuss rumours surrounding one Dubai-based trading firm who is already suspected to have failed.

Prior to IE Week the company in question told Ship & Bunker that it continued to operate normally and remained current on all financial obligations, but has not been reachable since then to answer further questions about its position.

While the rumours are yet to be clarified, the concern about its position is illustrative of the wider level of concern in the market about counterparty financial stability.

"It's a minefield out there right now," one source said.

What Comes Next?

It remains unclear as to when the current market conditions will change, particularly with the lower for longer outlook for bunker prices.

A jump in oil price in the event of conflict in Iran or a similarly disruptive event could raise bunker prices and margins.

But heightened geopolitical risk over the past year has generally not produced anything like the kind of price rises and volatility that would have been seen in the past on the back of similar headlines.

Without clear disruption to energy production or delivery infrastructure, the market reaction is likely to remain muted.

One credit manager pointed to the possibility of a jump in interest rates as a scenario that could lead to easing competition, something that could potentially be triggered by broader economic fallout from a bursting AI tech bubble.

But the source also pointed to the risk of bankruptcies among smaller trading firms in this scenario leading to lenders abandoning commodity trade finance for the bunker industry on concern the industry cannot be relied upon - a concern that has been building for years already.

Growth, Change

On the whole, sources from physical suppliers were more positive than their trader counterparts, in particular physical suppliers focused on geographical niches where the local shipping market has been performing well.

Some of the world's largest physical suppliers also reported they had grown market share in 2025.

There were also those who felt they had a solid model and a strong cash position, and were left relatively unconcerned with the current market conditions.

Others voiced that the current climate was the ideal time to expand on favourable terms,

"We have already looked at a few opportunities and as long as it is done sensibly, and we don't over extend, I think its a great time for growth", one CEO told Ship & Bunker. 

Bunker procurement and trading technology companies also report continuing growth, with no sign of digitalisation slowing as a trend in the market.

Some in the industry more widely regard the current weak market conditions as a chance to rethink their business models.

"You can just focus on keeping the home fires burning," one executive said.

"But in a market like this I think the right thing to do is to have more ambition and find new opportunities."