Glander International Bunkering is seeking growth and expects to see a "new normal" shipping and bunker market as global trade recovers, with the Port of Singapore set for another year of strong demand due to its impetus on cleaner fuels and ready availability of HSFO, company CEO Carsten Ladekjær said.
"Last year we noticed a demand shift partly caused by COVID-19 and, in some cases, in favor of larger flow ports such as Singapore," Ladekjær told S&P Global Platts in an interview on Aug. 4.
"The correlation between these shifts and regional lockdowns was quite remarkable… This year I believe we might see more demand growth in Singapore and the rest of the world in line with the recovery of the global economy," he added.
Singapore, the world's largest bunkering port, recorded a 5% year-on-year rise in bunker sales volumes in 2020, data from the Maritime and Port Authority of Singapore showed.
This came even though many major hubs worldwide saw sales volumes drop as weakening global macroeconomics amid the coronavirus spread severely dented oil demand, while shipping restrictions and complexities related to crew changes also curtailed international trade.
In addition, the Singapore trading community last year had to grapple with Hin Leong's bankruptcy, one of the world's largest collapses of an oil trading firm.
But Singapore quickly adapted after this setback, Ladekjær said. In the wake of Hin Leong's collapse, new suppliers quickly emerged, and others stepped up to fill the vacuum, he said.
"As a result, the supplier landscape changed rapidly in Singapore, with new entrants as well as established players hungry and ready to take their market share," he added.
As far as the global bunker market was concerned, the credit situation remained fairly balanced too, Ladekjær said, adding that strong freight rates also prompted clients in some large segments to pay on time and hence free up credit for more deliveries with the same supplier or trader, he said.
"The big question remains if this will continue, or if we will see the credit situation tighten going forward," he added.
HSFO demand support
Singapore's marine fuel sales to date in 2021 have been mostly underpinned by strong high sulfur fuel oil demand, reflecting the continued rise in scrubber installations by shipowners prompted by a favorable price differential between low- and high-sulfur fuel oil, known as the Hi-5 spread.
In June, Singapore's sales of sales of high sulfur bunker fuel, which includes 180 CST, 380 CST and 500 CST bunker fuel grades, rose 31.9% year on year to 1.06 million mt in June and comprised 25.8% of total sales in the month, latest MPA data showed.
"Right now, we see a price spread of around $120/mt in Singapore between HSFO and VLSFO," Ladekjær said.
"From an economic point of view, this should make scrubbers attractive again. Furthermore, we are seeing that in particular shipping segments, which are currently under pressure, having a scrubber can make the difference between breaking even with current freight rates or not," he added.
Meanwhile, HSFO supply will likely continue be limited to larger flow ports such as Singapore, Ladekjær said.
"In order to supply HSFO you need to dedicate supply assets, and this means you need to have a certain demand flow," Ladekjær said.
Access to competitive products is also required. If these parameters can be met, some suppliers in smaller ports may start offering HSFO too, but such cases will be the exception rather than the rule, he said.
Company seeks expansion
Glander International Bunkering's marine fuel volumes for its fiscal year 2020-21 to April 30 rose 18.7% year on year despite the challenges posed by COVID-19, the company said earlier.
"When looking at fiscal 2021-22 compared with the previous year, we remain cautiously optimistic," Ladekjær said.
After seeing a surge in demand during transition to the International Maritime Organization's global low sulfur mandate, the Fujairah bunker market was somewhat negatively affected by regional sanctions and the global pandemic, as low oil prices caused by lower demand, he said.
"I am confident that Fujairah is coming back strong, and we shall continue to have strong focus on this market also," Ladekjær said.
The company continues to seek growth in new markets worldwide and was closely monitoring geographic gaps to expand its global reach, he added.
Montreal recently became the company's second location in North America and ninth worldwide, specializing in northern territories like Canada and the US East Coast.
