Global bunker trader Sing Fuels has eyes set on new geographic forays and diversification of product offerings, as it strengthens its commitment toward the environment while the shipping industry embraces cleaner fuels, top company executives told S&P Global Platts in an interview.
The Singapore-headquartered company’s revenues jumped 45% year on year in the financial year ended September, with its total marine fuel sales volumes up 20% on the year, Sonnich Thomsen, managing director bunkers, said.
Sing Fuels reported robust growth despite weak global marine fuel demand, due to COVID-related movement restrictions on shipping activity and shrinking margins amid intense competition.
“Sing Fuels is well positioned for another year of strong growth, with the company targeting a 20% [year on year] rise in its bunker fuel sales in financial year 2021-22,” Thomsen said. “Europe as a region highly interests us. We are also hiring more people in the US.”
The company aims to primarily grow organically and focus on trading operations, rather than becoming a physical supplier, Chief Operating Officer Satnam Singh said.
“It is also considering joint ventures, partnerships, and acquisitions. So, the hunt is on.”
A potential partner “has to be aligned with our DNA and culture that has helped us reach where we are today,” Singh said, adding that company was looking for diversification “across the oil barrel” and exploring opportunities for base oils and lubricants in the Middle East.
It is also planning to establish an LPG trading desk by the first quarter, 2022, Singh said. Sing Fuels already has an LNG trading desk that facilitates LNG bunkering, including, mapping global LNG suppliers, port availability, quantity and ships that require it.
Sustainable shipping
Sing Fuels is pursuing growth in the renewable energy sector, including, biofuels, and investing in clean technology companies to accelerate its decarbonization efforts.
It invested in Singapore-based energy storage company VFlowTech Pte Ltd that aims to develop affordable and efficient green energy solutions, including, vanadium redox flow batteries, and formed a joint venture called VFlowTech Africa.
“Through this JV, we are aiming to build micro-grids,” CEO Vikash Dhanuka said. “By building micro-grids in the African region, we would have access to our own carbon credits there that can be eventually used for offsetting for our customers.”
Shipping industry’s decarbonization efforts are gaining traction, due to stricter environmental rules, with the ongoing UN Climate Change Conference, COP26, only set to increase that focus.
“The industry’s short term decarbonization goals seem to be on track but more needs to be done,” Thomsen said.
While investing in low carbon ships is desirable, it comes with challenges and increased costs. “Who will pick up the tab for these alternative fuels still needs to be decided,” he said.
The industry currently doesn’t have any alternative fuels that are both scalable and viable, according to Singh.
Bunker industry outlook
Global bunker sales are set to drop by 5%-6% year on year in 2021 due to the disruption caused by the COVID-19 pandemic, Thomsen said. Bunker sales slumped 8%-10% in 2020, from 2019, according to estimates from some industry sources.
However, major bunkering hubs, such as, Singapore have been more resilient due to its faster turnaround time for bunkering and stricter enforcement of rules, Thomsen said.
“There is an enormous thrust around scrubbers as the Hi-5 is more stable, and the payback is both easier to calculate and looks attractive,” Thomsen said.
The Hi-5 averaged $298.90/mt in January 2020 in Singapore, as the market transitioned to the IMO 2020 mandate. The spread has averaged mostly over $100/mt on a monthly basis in 2021, with October average at $102.24/mt.
Sing Fuels is cautiously optimistic about the industry’s outlook, as the sector grapples with volatile oil prices, HSFO shortage and tight credit availability.
“We hope we don’t see an extension of this [COVID-19] scenario, where travelling is allowed but only in pockets,” Singh said.
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