Singapore May bunker sales drop but cautious optimism prevails for 2020

Singapore — Singapore, the world's largest bunkering port, saw its May bunker fuel sales dip, bucking the year-on-year rise in monthly marine fuel sales witnessed from the start of 2020 until April, as weakening macroeconomic factors and a slowdown in shipping amid the global coronavirus pandemic weighed on demand.

On the year, May sales decreased 81,500 mt, or 2.03%, data from the Maritime and Port Authority of Singapore, or MPA, showed on June 15.

"Demand has dwindled on the back of the coronavirus pandemic as well as a bearish macroeconomic outlook," a Singapore-based bunker trader said. "Most of the inquiries we received in May were for smaller than usual parcel sizes of below 1,000 mt."

Other May shipping-related statistics released by the MPA also showed a decline, reflecting the impact of the pandemic, which had mostly eluded the city-port's fortunes in such a drastic manner so far.

Ship arrivals in Singapore plunged 43.7% year on year in May at 6,582 while cargo throughput dropped 20.4% year on year at 44.44 million mt, MPA data showed.

Blank sailings – when a ship skips a port on its route or the entire journey is canceled – have become rampant, a shipping source said.

"We have been cautious not to stock up too much LSFO due to weak demand for bulk carrier charters," said another Singapore-based shipowner.

He added that he has 30,000 mt of low sulfur fuel oil from his second quarter contracts that he has yet to lift, and is hoping to rollover the volume to the third quarter.

The May bunker fuel decline presents a sharp contrast to April figures. April sales volume had risen 401,600 mt, or 10.82%, year on year, according to MPA data.

The April momentum was not sustainable as the country's latest gross domestic product outlook points toward a sharp contraction, industry sources said.

Singapore's GDP is expected to shrink between 4% and 7% this year, lower compared with the previous projection of between 1% and 4% contraction, Singapore's Ministry of Trade and Industry said on May 26.

Singapore's economy will shrink by 11.8% in the second quarter year on year, a quarterly survey of 23 economists and analysts polled by the Monetary Authority of Singapore showed, The Straits Times reported on June 15.

This comes even as Singapore will exit its Phase 1 "Circuit Breaker" lockdown measures to enter Phase 2 from June 19, when COVID-19 related restrictions will be eased further.

Navigating in choppy waters

"We are still receiving inquiries but for most of May and June, these inquiries were for smaller than usual parcel sizes of 1,000 mt and below," a second bunker trader said.

Demand from shipowners, who own tankers, is still supported somewhat but those who own dry bulk carriers will likely continue to see their charters affected, he said.

According to traders, many shipowners have only been lifting a portion of their contractual volumes since April, resulting in an oversupply of bunker fuel in Singapore.

"Even if demand improves in July, it will take a couple of months more for oversupply to ease," another trader added.

Despite the drop in May bunker figures, some sources said Singapore's 2020 bunker sales were likely to remain steady year on year, as shipping restrictions ease worldwide and Singapore's initiatives showed results.

Even if sales were steady, this would be no ordinary feat, given the huge volumes Singapore does and the ensuing challenging market conditions, they said.

This comes as Singapore has kept its port open to ensure a smooth movement of goods.

"We worked with over 40 ports around the world, on a common declaration to keep the global supply chain going," said Quah Leh Hoon, MPA Chief Executive, in a statement on June 4.

In April, the MPA also unveiled an S$27 million ($19.4 million) aid package as part of a "MaritimeSG Together Package" for the maritime industry, which took effect from May 1.

Meanwhile, the MPA has also been supporting the industry by facilitating crew changes.

To date, MPA has approved more than 4,000 cases of crew sign-on and sign-off for over 300 companies since March 27, it said in a statement on June 12.