BUNKER VOLUMES: Red Sea Diversions Help Boost Q1 Bunker Demand at Global Hubs by 6.4%

Demand at key marine fuel hubs jumped on both a yearly and sequential quarterly basis in the first quarter of 2024. Image Credit: Ship & Bunker

    •  6.4% average advance in Q1 2024 vs Q1 2023
    •  Q1 volumes see 3.6% gain from Q4 20232
    •  Container-focused ports see strongest gains
    •  Read the full report here: shipandbunker.com/bi/bunker-volumes

Demand at key marine fuel hubs jumped on both a yearly and sequential quarterly basis in the first quarter of 2024, according to the latest market survey of bunker sales volumes in 17 leading global locations.

As in previous quarters, Ship & Bunker and consultancy 2050 Marine Energy surveyed bunker market participants around the world alongside official data where available and found an average rise of 6.4% in volumes in the first quarter from the same period of 2023. The year-on-year decline compares with a 0.4% year-on-year advance in the fourth quarter. Q1 volumes sequentially were 3.6% higher than in Q4.

The survey covers about 60% of the global demand total shown by official IMO data.

2050 Marine Energy's Adrian Tolson pointed significant disruption to shipping patterns in the Red Sea and Panama as the main reasons for Q1's gains.

"Q1 2024 abundantly evidenced the demand disruption we had already seen in the last quarter of 2023 as global shipping grappled with missiles in the Red Sea and a Panama Canal operating well below capacity," Tolson said.

"Major supply locations suffered in different ways with double digit increases and double-digit declines in demand being seen while overall there was an increase in global demand during the period.   

"Most major container ports saw significant increases as vessels changed routes, went faster and so took more fuel.

"The world's largest bunker port, Singapore, registering a 12% year on year gain was quite an achievement and on the negative side Panama with a 14% fall in demand was the most obvious casualty."

Red Sea Diversions

Diversions away from the Red Sea and Suez Canal to avoid attacks from Yemen were the most important factor in the market in Q1, with impacts felt around the world.

The most immediate impact came in ports around Africa in particular, with local suppliers noting demand gains in Mozambique, Mauritius, various West African locations and the Canary Islands.

South Africa has largely missed out on this phenomenon because of a local regulatory dispute shutting down supply at Algoa Bay, its largest bunkering location.

But the impact was also felt more widely in the large hubs around the world -- Singapore, ARA, New York and LA/Long Beach in particular -- with most locations with a significant container presence seeing gains.

Growth of HSFO

Another factor of note in Q1 -- and one loosely connected to the Red Sea diversions -- has been the continued growth in market share of HSFO.

HSFO overtook VLSFO as the dominant bunker grade in Rotterdam in Q1 for the first time since the IMO transition, and HSFO saw increased market share at ports around the world.

The link to the Red Sea diversions is because of container ships being the segment that has taken on scrubbers more than any other. With the diversions and the Panama transit reductions leaving this segment operating at next to full capacity, HSFO has seen a demand boost relative to other bunker grades.

Uncertain Outlook Ahead

The outlook for 2024 as a whole looks uncertain.

As of the summer, Houthi attacks in the Red Sea and Gulf of Aden show no signs of slowing down, meaning increased demand from diversions away from these areas is likely to remain a factor for the rest of the year -- although a rapid ceasefire deal in Gaza bringing an end to these attacks cannot be ruled out.

But transit levels though the Panama Canal appear to be normalising much more quickly, which should ease pressures on the container segment and lower demand.

"Water shortages in Panama are now largely resolved, and so we should expect demand patterns in some ports to return to normal," Tolson said.

"But sanctions and continued actions by the Houthis will have their impact and keep us all guessing through the rest of 2024 and into 2025."

Methodology

As with the previous surveys the areas covered by the survey are Singapore, the Amsterdam-Rotterdam-Antwerp (ARA) hub, Fujairah, the US Gulf, South Korea, Russia, the Gibraltar Strait, Hong Kong, Panama, Zhoushan, Japan, New York, West Africa, South Africa, the Canary Islands, Los Angeles/Long Beach and Turkey. Data is sourced from a combination of market participants and official records.

The full breakdown of the survey results including sales volumes in each bunkering region for Q1 2024 and 2023 is available by clicking here.