Dubai — The UAE's Port of Fujairah stands to lose out on crude oil and refined product exports and bunker sales if the spiraling COVID-19 crisis in India translates into slowing economic growth for Asia's third-largest economy.
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India's second COVID-19 wave could knock off as much as 2.8 percentage points from GDP growth in the fiscal year ended March 31, 2022, S&P Global Ratings said in a May 5 report. It said it was reconsidering its 11% GDP growth forecast, against a contraction of 8% in 2020.
"Much will depend on social distancing, whether enforced or voluntary, the pace of vaccinations, and the degree to which previous infections provide immunity," it said. "The government is responding to the latest outbreak with a series of localized lockdowns, while avoiding a nationwide lockdown, which would have more adverse economic implications."
Fujairah is the world's third-largest bunkering hub, with sales falling month on month since February, according to port data. India's crude and product imports from the UAE east coast port have already slowed this year, averaging 77,200 b/d compared with 116,000 b/d for all of 2020, according to commodity data company Kpler. Analysts said India's crude demand probably started to slow in April, continuing that trend into May as the country battles a record outbreak of COVID-19 that has led to lockdowns in many cities.
"A lot will depend on what happens in the next few months, but it's true India is an important trader with Fujairah," said Zhuwei Wang, Middle East analyst with S&P Global Platts Analytics. "Crude demand is already affected because of a drop in oil product consumption and may slip further if the government imposes a national lockdown and that will hurt Fujairah."
India was the fourth-largest customer of oil products and crude oil from Fujairah last year, after Japan, China and South Korea, according to Kpler. India predominately takes crude from Fujairah, with minor shipments of gasoline, fuel oils and naphtha.
"The slowing COVID-hit Indian economy will surely affect shipping volumes in the region and therefore bunker demand in Fujairah," said Apurva Mali, founder of bunker supplier Masc Co. DMCC in Dubai.
Fujairah has banned crew changes at the port for vessels coming from India in the past 14 days, following a similar move by Singapore. Deck officers and marine engineers on vessels calling at Fujairah are mainly from India, while the rest of the crews come from the Philippines, Mali said. "The crew change ban will not affect bunker demand," he said. "It will just mean the crew extend their contract by a few weeks more."