Ships Vie With Japan Utilities as Fuel Supplies Dwindle

Wednesday, March 14, 2012

Oil refiners’ investment in more-efficient refinery facilities is leaving shipping lines competing with Japanese power producers for a fuel no one wants to make.
Refiners are upgrading plants to cut output of fuel oil, a byproduct of making gasoline and diesel, as it sells for less than the price of crude. Shipping lines are seeking more of the product -- known in the industry as bunker -- to fuel expanding fleets, while Japanese electric companies are speeding purchases as they close nuclear plants for safety checks following 2011’s tsunami.
“We have a bunker market which is still growing, and we have no fuel,” said Fereidun Fesharaki, chairman of Singapore-based Facts Global Energy Inc. “Everyone is destroying the capability for fuel-oil production.”
Japan is increasing fuel-oil purchases as power companies burn more of the substance to offset lost nuclear capacity. The country boosted imports 19 percent, to 799,010 kiloliters, in January, the highest since Bloomberg began tracking the data in 2001. Demand from local power plants may rise 7.1 percent this year, according to Vienna, Austria-based JBC Energdewsy GmbH.
The crunch means bunker has averaged 25 percent higher so far this year in Singapore trading than a year earlier, more than the 17 percent rise for Dubai crude. Container lines are unable to pass the increase to customers because of overcapacity, leaving AP Moeller-Maersk A/S’s cargo-box unit, the world’s largest, forecasting a 2012 loss, and Orient Overseas (International) Ltd. predicting a “difficult” year.
“Shipping lines are in a very tight squeeze,” said Um Kyung A, a Seoul-based Shinyoung Securities Co. analyst. “Even with the recent rate increases, they’re not going to earn enough to cover costs.”
Bunker-fuel prices may reach $800 per metric ton this year, 11 percent more than last year’s high, amid a possible supply shortage, she said. Asian bunker demand may grow 3.4 percent this year, JBC Energy GmbH said in a March 8 report. It didn’t give a production forecast.
The price of 380-centistoke bunker fuel has traded at an average discount of 51 cents a barrel to Dubai crude this year in Singapore. Gasoline has traded at a premium of $12. (Bloomberg)
Container lines are more affected by fuel prices than operators of dry-bulk vessels and tankers, as they run scheduled services, which take place whatever the level of demand. Other vessels generally only operate when they have cargo. They also travel at slower and more fuel-efficient speeds, and customers are more likely to be contracted to pay for fuel.
Tighter environmental regulations have also increased fuel costs, as bunker has had to contain less sulfur since January, said Basheer Ahmed Sayeed, chief executive officer of fuel trader Chemoil Adani (Singapore) Pte. Meeting that requirement means fuel oil has to be blended with more expensive and cleaner types of refined oil, he said.
“Already the shipping industry is in such a tight spot, and this is an added pressure,” he said. “As a bunker supplier, whether to give credit lines to shippers is a big question.”
Fuel oil is among residual fuels which are the heaviest and most-polluting products created from refining crude. Refiners break down crude into four main types of products -- liquefied petroleum gas; light fuels, such as gasoline; middle distillates including diesel; and residual fuels. The residuals also include bitumen and asphalt.

 

Maritime Reporter April 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Environmental

Shipping is Cutting CO2 Emissions

London-based shipping advisors Drewry Supply Chain Associates said that shipping liner operators have made significant inroads into cutting CO2 emissions.   In

Naval Authorities Rely on OSE Separators from GEA

The trend of modernizing ships and fitting them with more efficient separator systems, which has been noticeable since 2014 particularly in Europe and North America,

MacGregor's Pusnes bow loading systems for Suezmax Tankers

MacGregor, part of Cargotec, has secured contracts to supply Pusnes bow loading systems for three newbuild shuttle tankers intended for operations in Brazilian waters.

Energy

New CEO for Evergas

Evergas has appointed Steffen Jacobsen as CEO of the company as of 8 May 2015 Mr. Jacobsen joined Evergas 1 February 2015 as Vice President, Fleet after almost 35 years in Maersk.

Icebreakers Ordered for Neft’s Novy Port Project

Aker Arctic’s icebreaker design selected for Gazprom Neft’s Novy Port project   Aker Arctic and Vyborg Shipyard have confirmed a contract for the design of two

MacGregor's Pusnes bow loading systems for Suezmax Tankers

MacGregor, part of Cargotec, has secured contracts to supply Pusnes bow loading systems for three newbuild shuttle tankers intended for operations in Brazilian waters.

News

New CEO for Evergas

Evergas has appointed Steffen Jacobsen as CEO of the company as of 8 May 2015 Mr. Jacobsen joined Evergas 1 February 2015 as Vice President, Fleet after almost 35 years in Maersk.

NCSP Group Cargo Traffic Up 6% in Q1 2015

Novorossiysk Commercial Sea Port Group (NCSP Group or the Group) (LSE: NCSP, Moscow Exchange: NMTP) reports that Group’s consolidated cargo turnover in Q1 2015 increased by 2 million tonnes or 6.

Naming Ceremony of Evergreen's EVER LYRIC

Evergreen Group today held the naming ceremony for EVER LYRIC, the eighth of its L-type vessels built by CSBC Corporation in Taiwan. The ceremony took place

People in the News

China Snubs G7 Declaration on Sea Row

Reacting to recent declaration of  the Group of Seven (G7) major nations' Foreign Ministers on maritime , China said “the situation of this region is generally stable,

Newport News Shipbuilding Hosts Sen. Inhofe

Huntington Ingalls Industries (HII) today hosted Sen. James M. Inhofe, R-Okla., for a tour of the company's Newport News Shipbuilding division.   The senator,

Hempel CEO Jullien Plans Retirement

Pierre-Yves Jullien, CEO of Hempel A/S since 2005, has decided to retire after nearly 40 years in the Group. He will step down from his role as CEO on March 31, 2016 at the latest.

 
 
Maritime Standards Navigation Offshore Oil Pipelines Port Authority Ship Electronics Ship Simulators Shipbuilding / Vessel Construction Sonar Winch
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.4110 sec (2 req/sec)