Bunker prices are set to increase over the next few years, according to the International Bunker Industry Association (Ibia).
Speaking at a recent seminar in Cape Town, Ibia chief executive Justin Murphy said while the global sulphur cap would have an impact on bunkering prices going forward, the biggest indicator of price was still the underlying price of crude oil.
“In reality the sulphur cap will be slightly higher, but if the crude price drops by 50%, for example, then the bunker prices will be cheaper,” he said. “But we do not foresee the price of crude dropping all that much and our expectations are that bunker prices will increase over the next few years.”
According to Murphy, in the new world of bunkering scale would become a key success factor. He said all indications were that in the future bunker industry service providers would either become regional niche specialists or large integrated global providers.
“If you are stuck in the middle and don’t have the scale of a large global company or you are not a local expert who has been in market for 40 years, you can expect to have questions asked as to why you are operating in the space,” he said. “We believe these middle companies are going to be squeezed out with only the niche specialists and the big players still able to offer a service.” This phenomenon would be accentuated by the limited access to finance and credit.
“There is a great degree of uncertainty and often anxiety over what is happening,” said Murphy who indicated that many of the larger companies were taking a very pragmatic view as they understood that bunkering remained a dynamic and variable sector. “What we are also seeing is that the greater mix of energy solutions available will ultimately lead to specialisation. We are not at a crossroads, but at a delta,” said Murphy.
“This is not about deciding to go left or right, but having to make the right decision with some 15 different options available. That is adding to the confusion and anxiety. The increased choices mean the risk of getting it wrong is higher.”
Ibia CE Justin Murphy.
