BAKU, Azerbaijan, April 6. The recovery in bunker fuel demand is expected to remain patchy in 2023 as the key factors weakening the performance in 2022 remain in play, Trend reports with reference to Fitch Solutions.
“According to our Operational Risk team, we expect that the
sanctions risk, adverse weather conditions, new trade regulations,
and labor market regulations are likely to continue to adversely
impact global trade in 2023, weakening our outlook for global
shipping market and demand for bunker fuel,” reads the latest
report from Fitch Solutions.
The company says that in 2022, the sales of marine fuels underperformed likely due to weakening economic sentiment and surging fuel costs that caused some demand destruction.
“That year, bunker fuel demand growth decelerated to an
estimated 1.3 percent y-o-y, from 3.5 percent y-o-y in 2021, on the
back of growing trade frictions. Even though we saw global trade
volumes growing steadily over the majority of the year, the World
Trade Index, published by the CPB Netherlands Bureau for Economic
Policy Analysis, started to show some weakness
starting in Q422 and into 2023,” Fitch Solutions says.
The report reveals that the demand for marine fuel varied across the region.
“Singapore saw a steep decline of 4.2 percent y-o-y in marine fuel sales over 2022. At the same time, some reports from Ship & Bunker indicate a surge in demand across key Western ports, including Rotterdam and New York. Overall, we estimate total marine fuel demand saw decelerating but positive growth in 2022, with the growth rate falling from 3.5 percent in 2021 to 1.3 percent,” analysts from Fitch Solutions note.
The company notes that marine fuel price benchmarks have retreated from 2022 highs and underperformed over Q123 driven by weakening global investment and trade sentiment amid slowing global economic growth.
“Key marine fuel price benchmarks have experienced a sell-off over the past months as the fears over future demand pulled the prices down across all key ports. The very low sulphur fuel oil (VLSFO) price benchmarks retreated to levels below USD600/t in Q123, from the 2022 high of USD1137/t for Singapore (51.1% reduction in price), USD1028/t in Rotterdam (47.4%), USD987/t in Houston (43.0%) and USD1171/t in Fujairah (53.1%).”
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