S'pore bunker mart faces stormy seas

S'pore bunker mart faces stormy seas

SINGAPORE (Reuter): Singapore bunker market faces stormy seas as it struggles to maintain a hold on shippers increasingly preferring to refuel in South Korea and the United Arab Emirates (UAE), industry sources said yesterday.

"The Asia bunker pie is growing, but Singapore is getting a smaller slice each time as it become more expensive and as other ports in Asia, in particular South Korea, are expanding at a very fast rate," said an independent bunker trader.

Bunker fuel oil consumption in the Asia-Pacific region is expected to grow 3.8 percent a year between 1995 and 2000 and 3.4 percent from 2000 to 2005, according to forecast by Fereidun Fesharaki of Hawaii's East-West Center.

But major oil and independent bunker traders said that growth would be outside Singapore, until now the region's premier port for refueling.

They said Singapore bunker sales volume in 1997 would slip by 3.0 percent after a similar decrease in 1996. By comparison, South Korean bunker sales volume grew by 13 percent in 1996.

"We may save up to Singapore $2-$3 (US$1.38-$2.08) per ton." said a ship owner of refueling in South Korea.

"In Singapore, we have to pay a wharfage costs of S$2.20 per ton which we would not have to pay anywhere else in Asia," he said.

"The Fujairah market (in the UAE), with a large supply base, is also booming with conditions more favorable for very large crude carriers to bunker, compared to Singapore. Singapore caters for more bulk and cargo ships," said a Mideast trader.

"Singapore may be able to maintain its competitive edge for the next five years but the good old days are certainly gone because it is no longer the most desired bunkering center," said a trader with a major oil firm.

A ship owner said more ships are heading directly to Asian ports instead of using Singapore as a transshipment port, cutting time and costs. If the trend continued, Singapore's bunker sales would be spread around the region, he added.

Shippers said Malaysia was another potential rival.

"Singapore may able to sustain its current share of the Asia bunker market for the next two to three years but may lose some of its volumes when Port Klang develops," said the trader with a major oil firm.

Malaysia is developing Port Klang on the west coast as a rival to Singapore and the trader said bunker fuel terminals at south Malaysia's Pasir Gudang had already taken some of Singapore's business.

"We would definitely see more price competitiveness as other regional ports develop," said the ship owner.

Dealers in Singapore said sales just outside Singapore waters had also become a major concern.

"More and more vessels are bunkering off port limits," said a trader.

"Firstly they do not have to pay the $2.20 per ton wharfage costs. Secondly, it save time. The ship does not need to travel the extra distance coming into Singapore. And third, it is a free world out there, not regulated by the Singapore authorities," he said.

Shippers, however, said that while refueling at sea may save time and money, they can be shortchanged on quality as suppliers do not have to stick to Singapore's quality control regulations.