Middelfart-based Bunker Holding is the world's largest marine fuel seller by volumes. Image Credit: Bunker Holding
Marine fuels conglomerate Bunker Holding is making its first forays into the methanol market.
The company recently participated -- as yet unsuccessfully -- in two tenders launched by shipping companies seeking green methanol deals, Carlos Torres, global head of strategic relationships and partnerships at Bunker Holding, told Ship & Bunker on Tuesday.
"The tenders were from two different customers that ... were trying to secure long-term green/bio methanol supply for their methanol-powered vessels," Torres said.
"We were participating in the tenders with the backing of major methanol producers; unfortunately, we were not successful."
Bunker Holding is aiming for at least 5% of its sales to be of 'very low carbon fuels' by 2030.
The challenge at present is in the kind of commitment on pricing and contract length that the buyers are seeking, Torres added.
The customers were looking for 10-year supply contracts, and at a fixed price
"The customers were looking for 10-year supply contracts, and at a fixed price, which makes the process very challenging," he said.
"This is a new trend that we are seeing, and that we believe will be in play for the new marine fuels, especially methanol, ammonia and biogas."
Committing to ten years of methanol supply at fixed prices would be a significant risk for any bunkering firm, with considerable uncertainty over the future prospects for this market and limited accurate hedging instruments available at present.
This price risk is also a struggle for the buy side of the equation, facing an uncertain spot price for methanol over the lifetime of their new ships. But as most methanol-fuelled ships currently being ordered are dual-fuelled, these buyers will also have the option of reverting to conventional bunker consumption in the event of methanol becoming too expensive or challenging to source at the right ports.
Methanol is rapidly gaining in popularity as an alternative marine fuel, with orders of methanol-fuelled tonnage now coming in regularly from a variety of shipping segments. The main challenge for this market will be the scaling-up of green methanol supply in time to meet the needs of the new ships as they are delivered.