Bunker fuel is a fuel widely used by the shipping and marine industry and is classified into two types: distillate fuel and residual fuel. Out of this residual fuel is majorly used in the shipping industry for the generation of power in the engine. Some of the major end-user of bunker fuels are bulk & general cargo vessels, container vessels, tankers vessels, and other vessels.
Global bunker fuel market is estimated to account for around US$ 278.81 million in terms of value in the year 2019 and it predicted to grow at a CAGR of 4.6% during the forecast period (2020-2027).
The growing demand for bunker oil from crude oil & products tanker movement is projected to propel the market growth of the bunker fuel. Increasing traffic is subsequently adding immense growth to the shipping industry especially cargo vessels which are projected to foster the market growth of the bunker fuel. Moreover, the emergence of different oil grades is again anticipated to propel the market growth of bunker oil.
Growing focus of government to promote the use of low-sulfur bunker fuels in order to curb the sulfur-emission in the environment is projected to serve major growth opportunities. For instance, in October 2019, Singapore-based Asia Pacific Exchange (APEX) launched a low-sulfur fuel oil (LSFO) futures contract for helping shipping and energy firms manage price fluctuations as a stricter global marine fuel rules kick in from 2020. New International Maritime Organization (IMO) regulations cutting the allowed sulfur content in shipping fuel to 0.5% from 3.5% in a bid to combat air pollution.
The growing use of LNG as an alternative fuel is projected to hamper the demand for the bunker fuel. LNG bunkering is the only ideal alternative, which meets the NOx Emission Control Area (NECA) and Sulphur Emission Control Area (SECA) requirements that reduce the use of expensive marine gas oil.
On the basis of region, Asia Pacific region dominated the global bunker fuel market in 2019 with a 39.3% of market share in terms of value, followed by Europe and Middle East & Africa respectively.
On the basis of fuel grade, IFO 380 segment dominated the global bunker fuel market in 2019 with a 67.8% of market share in terms of value, followed by IFO Others and MDO/MGO segments respectively.
Logistic and storage agreements among key manufacturers for supply marine fuel for expanding business presence is a major trend in the market. For instance, in February 2019, Maersk and PBF Logistics LP (PBFX) announced an agreement for Maersk to source and PBFX to process crude oil at CPI Operations LLC. The agreement enables Maersk Oil Trading to supply IMO 2020-compliant 0.5% marine fuel to its customers on the US East Coast. Annual production will be around 1.25 million metric tons (mt), the equivalent of approx. 10% of A.P. Moller - Maersk’s annual fuel demand.
Acquisition and merger among key manufacturers is one of the current business growth strategies in the market. For instance, in March 2020, Neste, the producer of renewable diesel refined from waste and residues, announced that it has acquired Mahoney Environmental, a collector and recycler of used cooking oil in the United States, and its affiliated entities. The acquisition has been approved by regulatory authorities and the deal has been closed.
Global Bunker Fuel Market - Impact of Coronavirus (Covid-19) Pandemic
The rapid spread of coronavirus had a major impact on global shipping markets, with slump in demands for goods from various countries which had a ripple effect on everything from container ships to oil tankers. This has led to a decreasing demand for marine fuel from shipping industry. According to Coherent Market Insights, bunker fuel market is expected to grow at a lower CAGR between 2020 and 2021.
Few Recent Developments
In August 2019, BP Marine announced that it is adding Valencia, Spain, to its global portfolio of bunker supply ports. The fuel supplier will be operating a dedicated bunkering barge with 4,000-tonne storage capacity at the Mediterranean port.
By Fuel Grade
By Vessel Type