The Singapore bunker fuel market is expected to grow at a CAGR of more than 14% during 2020 - 2025. The bunker fuel market in the country is mainly driven by the ever-rising marine transportation of essential commodities, implementation of the stricter environmental regulations driving the demand for cleaner bunker fuels, and the increase in the use of support vessels for offshore oil and gas developments. However, the outbreak of the COVID-19 leading to the global economic slowdown and drop in maritime imports and exports are likely to restrain the growth of the Singapore bunker fuel market in the coming years.
- The Very Low Sulfur Fuel Oil (VLSFO) is expected to witness significant growth in the market during the forecast period, owing to factors like the IMO 2020 Regulations that came into effect from January 1st, 2020.
- Developing sea trade routes and rising international maritime trade may offer tremendous opportunities for marine fuel suppliers in the region.
- Singapore is likely to witness a surge in the bunker fuel market owing to IMO 2020 Regulations and recovery in maritime trade.
Key Market Trends
Very Low Sulphur Fuel Oil (VLSFO) to Witness Significant Growth
- Very Low Sulfur Fuel Oil (VLSFO) is expected to witness significant growth in the forecast period, owing to factors like IMO 2020 regulations that came into effect on 1st January 2020, and rising environmental concerns over high greenhouse gases emissions from the marine sector.
- The demand for VLSFO saw a steady growth since 2019 and a significant increase since January 2020 due to the IMO 2020 Regulations coming into effect.
- Major players of the region had started the trial and production of VLSFO ahead of the imposition of IMO 2020.
- In 2020, PetroChina International, which is active in the Singapore bunker fuel market, announced to produced and supplied its first batch of IMO 2020-compliant marine fuel for Singapore terminal.
- High Sulphur fuel oil (HSFO) has remained the most common fuel used in the shipping industry until 2019. However, after successful production and supplies of VLSFO, in Jan 2020, sales of marine fuels in Singapore jumped to a two-year high of 4.515 million tonnes.
- Therefore, with the increase in the demand for cleaner fuel and the implementation of IMO 2020 Regulations, shallow sulfur fuel oil (VLSFO) is expected to rise significantly in the forecast period.
Singapore to Witness surge in Bunker Fuel Demand Owing to IMO 2020 Regulations.
- According to the Maritime and Port Authority, Singapore’s bunker fuel sales rose 7.51% and reached 4.51 million mt in January 2020. In March 2020, total sales came to 4.33 million mt due to shock in the bunker industry as Singapore witness some of the massive impact of COVID-19 on shipping.
- Moreover, crude prices also collapsed, which promote many shipowners to buy more bunker fuel for storage purposes. Also, the demand for marine gasoline increase as some shipowners were buying marine gasoline because there were no barge avails for low sulfur fuel oil because of high demand.
- China tax reform also impacts the Singapore bunker fuel industry as China applies both consumer and value-added taxes to bunker fuels, which promotes blender to import approximately 90% of fuel from Singapore or Malaysia.
- Therefore, factors such as declining bunker fuel price and IMO regulation, also with a single-player strategy to gain more profit, are expected to drive the bunker fuel market.
The Singapore bunker fuel market is moderately fragmented. Some of the major players in this market include Petrochina International, Sentek Marine & Trading Pte Ltd, Ocean Bunkering Services, Equatorial Marine Fuel Management Services, Shell Eastern Trading (Pte) Ltd, and Total Marine Fuels Pte Ltd.
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