MARKET SURVEY: Q2 Bunker Hub Demand Jumped by 1.9% on Year With Red Sea Diversions

Global bunker hub demand continued to climb on a yearly basis in Q2, with Red Sea diversions the largest factor setting the market's direction. Image Credit: Ship & Bunker

    •  1.9% average advance in Q2 2024 vs Q2 2023
    •  Q2 volumes see 4.3% fall from Q1 2023
    •  Container-focused ports see strongest gains
    •  Read the full report here: shipandbunker.com/bi/bunker-volumes

Demand at key marine fuel hubs jumped on a yearly basis in the second 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 1.9% in volumes in the second quarter from the same period of 2023. The year-on-year gain compares with a 6.4% year-on-year advance in the first quarter. Q2 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 to the Red Sea diversions as being the main factor hanging over the market.

"Q2 demand patterns still reflect the impact of limited transits via the Suez Canal," he said.

"There are continued adjustments to routes and schedules but generally Red Sea challenges still force most shipping companies to use the route around Africa.

"With limited African coastline supply options this has both supported robust Canary Islands demand and helped major cargo destinations maintain bunker sales in such locations as Singapore, Gibraltar and New York."

Singapore Heads for Record Year

With the Houthi attacks now having gone on for most of a year, more fixed plans are in place for how to deal with them, with fewer companies now uncertain over whether or not a voyage will involve Suez before it begins. 

Singapore has been one of the largest beneficiaries from this effect, Fratelli Cosulich's Guido Cardullo told Ship & Bunker.

"Probably one of the main stories has been the strength of the Singapore bunker market; this will be a record year for the volume delivered in Singapore," he said.

"This is mainly due to the disruption of the Suez Canal. Container vessels in particular are lifting significantly more in Singapore.

"So we see more stress, but at the same time, the market is ever more competitive.

"And of course, there are all the ports that are affected by the reduced transits through the Suez Canal -- Malta, Cyprus and Istanbul of course -- while on the other side you see very good demand in Las Palmas and West Africa."

Uncertain Outlook Ahead

The outlook for 2024 as a whole looks uncertain.

As of the autumn, 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.

At the end of the year, the port strike in the US looks set to become a major factor setting the direction of the market, and the duration of this strike will be critical in determining the impact.

"Overall demand was anticipated to contract in 2024, and this has clearly not yet been the case," Tolson said.

"The significant drop in Japanese bunker sales should be noted, resulting from refinery maintenance activity and some delayed startups.  

"Generally, the balance of 2024 should continue to show the same patterns with a gradual rationalization of demand. 

"Should the US East Coast and Gulf Coast ILA strike continue for some time, it can expected to generate a major loss of demand in affected North American ports and a spike in demand in those not affected both in North America (including Panama) and locations where cargo originates."

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 Q2 2024 and 2023 is available by clicking here.