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Fuel Market Tightnesses Persist Across North West Europe and the Mediterranean
Navigating the current fuel market landscape requires vigilance as supply constraints persist in several key regions, including Northwest Europe and the Mediterranean. Amidst a volatile geopolitical environment and fluctuating energy demands, bunker prices and availability remain sensitive to changes in supply and demand dynamics.
Northwest Europe: ARA Hub Faces HSFO Challenges
The Amsterdam-Rotterdam-Antwerp (ARA) hub,a crucial fuel oil trading center,is experiencing tightness in high sulfur fuel oil (HSFO) supply. According to a trader, securing full coverage from suppliers necessitates lead times of 5-7 days. While very low sulfur fuel oil (VLSFO) and low sulfur marine gas oil (LSMGO) availability is more robust, lead times for these grades stand at 3-5 days. Despite these challenges, self-reliant fuel oil stocks in the ARA region have grown by 8% so far this month compared to December, based on Insights Global data. The region’s fuel oil imports have surged to 219,000 barrels per day (b/d) this month, a significant jump from the 161,000 b/d imported in December, as reported by Vortexa.
The UK has emerged as the region’s primary fuel oil import source this month, accounting for 20% of total imports. Saudi Arabia follows closely with 19%, followed by poland (14%), Germany (11%), and Lithuania (10%).
Interestingly, independent gasoil inventories, encompassing diesel and heating oil, have averaged 16% higher in the ARA region this January compared to December. Gasoil and diesel imports have moderated to 185,000 b/d this month, down from the 238,000 b/d imported in December, according to Vortexa.
in contrast, Germany’s Hamburg port reports healthy supply across all fuel grades.An industry insider told ENGINE that recommended lead times are currently 3-5 days.
Mediterranean: Weather Disruptions Impact Bunkering Operations
The Mediterranean region grapples with weather-related challenges that disrupt bunkering operations. Gibraltar bunkering operations, temporarily suspended on Monday due to rough weather, resumed on Tuesday. However,suppliers face a backlog of vessels and expect adverse conditions to persist until thursday,leading to extended lead times of 5-7 days for all grades,as reported by a trader.
Huelva has also witnessed bunkering disruptions since Monday, with strong winds hindering supply operations. The suspension is anticipated to continue until Thursday, as wind gusts are forecast to remain at 34 knots on Wednesday and 29 knots on Thursday. Meanwhile, rough weather conditions in Las Palmas, Canary Islands, are expected to persist until January 31st, possibly triggering bunker disruptions. Recommended lead times for VLSFO, LSMGO, and HSFO grades are 7-10 days.
Piraeus, Greece, presents a diffrent scenario with slightly tight prompt bunker supply, with the earliest delivery dates for all grades available from February 3rd, according to a trader. however, favorable weather conditions are expected this week, potentially facilitating deliveries.
Malta offers good bunkering availability across all three grades, but the forecast for rough weather this week could potentially impede smooth deliveries. Istanbul, Turkey, also reports good bunker availability across all grades, with recommended lead times of 3-5 days.
Africa: South Africa Experiences VLSFO Constraints
South Africa’s key ports,Durban and Richards Bay,continue to face VLSFO supply tightness,with lead times stretching to 7-10 days. in a further progress, LSMGO stocks have once again run dry in Durban after a brief resumption last week. Mauritius’ Port Louis, though, stands in contrast, boasting good availability of VLSFO, LSMGO, and HSFO, with suppliers readily offering prompt deliveries.
Simultaneously occurring,offshore bunker deliveries are set to resume off Algoa Bay. A source reveals that the first offshore bunker operation in Algoa Bay as deliveries were banned in 2023 is scheduled for Wednesday. BP, a British oil supplier, secured the stem, which will be delivered by a barge owned by African Marine Solutions (AMSOL). Details regarding the stem’s quantity and fuel grade remain undisclosed.
The south African Revenue Service (SARS) is hosting an industry-level workshop on wednesday to discuss amendments to the Customs and Excise Act. This workshop will provide a platform for industry stakeholders to engage in discussions and provide input on the proposed changes.
What is the biggest challenge facing bunker buyers in Northwest Europe at the moment?
Bunker Market Turbulence: An Interview With a Procurement Expert
Navigating the current fuel market demands careful attention, with supply constraints persisting across key regions. Too shed light on these challenges, Archyde spoke with Adrian Sterling, a bunker procurement expert with over 15 years of experience in the maritime industry.
Adrian, thanks for joining us. What are the biggest challenges facing bunker buyers in Northwest Europe at the moment?
Its a pleasure to be here. The ARA hub is currently grappling with higher-than-usual lead times for high-sulfur fuel oil (HSFO). Securing full cover from suppliers can take 5-7 days, which is significantly longer than usual. While VLSFO and LSMGO availability is more robust, lead times for these grades are still around 3-5 days. This tightness stems from a combination of factors, including geopolitical uncertainty and ongoing fluctuations in demand.
We’ve seen a notable increase in fuel oil imports to the ARA region. Can you elaborate on the impact of this influx?
Yes, imports have surged this month. The UK is now the primary fuel oil import source for the region, followed by Saudi Arabia. this clearly demonstrates the regionS reliance on external supply chains to meet current demand. Though, it also highlights the vulnerability to geopolitical shifts and potential supply disruptions.
Looking towards the Mediterranean, we’re seeing weather disruptions significantly impacting bunkering operations. How are these conditions affecting bunker buyers?
Weather-related delays are indeed a major concern in the Mediterranean. Gibraltar, Huelva, and Las Palmas have all experienced temporary suspensions in bunkering operations due to rough weather. This has created extended lead times of 5-7 days for all grades in Gibraltar and potential further delays in the other ports. Buyers need to factor in this increased uncertainty when planning their bunkering operations. It makes adaptability and contingency planning essential.
What are your observations regarding the current situation in South Africa, especially in Durban?
South Africa’s key ports, Durban and Richards Bay, continue to face challenges with VLSFO supply. Lead times are stretched to 7-10 days. Even more concerning is the depletion of LSMGO stocks in Durban.Mauritius, on the other hand, offers good bunker availability across all grades.It highlights regional disparities and the importance of diversifying supply sources.
The offshore bunker market in Algoa Bay is set to resume after a ban. How do you see this development impacting the South African market?
This is certainly an engaging development. The resumption of offshore bunkering in Algoa Bay could provide some relief to Durban’s strained VLSFO supply.It can also offer an alternative bunkering option for larger vessels. However, it will be significant to monitor how this impacts pricing and overall supply dynamics in the region.
What advice would you give to bunker buyers operating in this volatile market?
My advice would be to adopt a proactive and flexible approach.
Diversify your sources: Relying on a single supplier can heighten vulnerability. Explore alternative suppliers and bunker locations.
Build strong relationships with suppliers: Open communication and trust are vital in navigating these uncertainties.
Be prepared to adjust your plans: Be ready to adapt to changing market conditions and unforeseen circumstances.
Consider hedging strategies: Explore options to mitigate price volatility.
As an expert, what do you think the future holds for the bunker market? Do you anticipate any long-term changes?
The bunker market is undeniably in a period of significant transformation. The increasing adoption of alternative fuels, geopolitical instability, and evolving regulations are all factors that will continue to shape its future.
Buyers need to stay abreast of these developments and adapt their strategies accordingly. The market will likely become more fragmented, with a greater emphasis on regional supply chains and niche offerings.
One thing is certain: navigating the bunker market will become increasingly complex, requiring a high level of expertise, adaptability, and foresight.
