Steep declines in marine fuel consumption triggered by the Covid-19 pandemic have put downward pressure on sales and margins, senior bunker industry executives say.
Vessel operators have in general cut down bunker purchases due to reduced sailings during the pandemic, with the cruise and passengership sectors hit particularly hard.
The bunker market has been affected by weak trade globally amid the dual health and economic crises, KPI OceanConnect chief executive Soren Holl told TradeWinds.
“The pace in the world trade has been reduced. [This] will of course have an impact on us as well,” said Holl, whose company was born from the merger between OceanConnect Marine and KPI Bridge Oil in August.
Demand destruction
KPI Bridge Oil recorded net profit of $6.08m in the financial year to 30 April, up from $3.82m in the previous 12 months. But it expects earnings to decrease slightly this year.
At Petrospot’s Global Bunker Summit, Cockett Group chief executive Cem Saral said his company estimates the world’s total bunker demand will fall by between 11% and 17% this year.
“Demand destruction that we had experienced caused a sharp decline in the industry margins,” he said, adding that many bunker firms might struggle to stay afloat.
“It goes without saying our industry is in survival mode.”
But Cockett’s analysis also suggests that bunker demand may have bottomed in the third quarter, assuming mass distribution of vaccines in late 2020 or early 2021.
'Sustained increase'
“We are seeing a sustained increase in oil products demand over the last 90 days,” Saral said.
If future lockdown measures are confined to small areas and do not last long, he predicted that worldwide consumption will return to pre-Covid levels in 2022.
Monjasa Americas managing director Rasmus Jacobsen said some bunker markets experienced demand falls of between 40% and 50% earlier this year before a quick rebound.
While observing signs of overall demand recovery, he warned: “It is a very tough market. You [have] got to fight very hard to find your market, to find your niche.”
