Market Trends of United States Bunker Fuel Industry
This section covers the major market trends shaping the US Bunker Fuel Market according to our research experts:
Very-Low Sulfur Fuel Oil (VLSFO) Segment is Expected to Witness Significant Growth
- The refining industry players in the country have indicated that they have enough infrastructure to meet the low-Sulphur conventional fuel requirements according to IMO regulations. The LNG bunkering infrastructure in the country is also relatively un-developed. Hence, the conventional fuel is expected to maintain the dominance in the bunker fuel industry during the forecast period.
- Marine fuel containing less than 0.5% of sulfur is generally termed as very-low sulfur fuel oil. Very-low sulfur fuel oil did not witness demand as a bunker fuel till 2019. However, the deadline for IMO 2020 led to an increase in the demand for VLSFO. From January 1, 2020, HSFO can only be used in ships having scrubbers installed to reduce the emissions.
- Most of the high-sulfur fuel oil (HSFO) bunker fuel market is expected to be shortly replaced by low-sulfur alternatives. Most of the VLSFO available in the market is blended from residual and distillate components, which are blended with numerous cutters of varying sulfur and viscosity to create an on-specification product.
- The demand for VLSFO witnessed a significant growth since January 2020, due to the IMO 2020 Regulations coming into effect. However, due to the weak demand caused by the outbreak of COVID-19, the price, as well as the demand for VLSFO, declined.
- Moreover, the demand for VLSFO is expected to rise with the control of the outbreak in the major import and export countries, like China and the United States. The demand for VLSFO is expected to revive after mid-2021. Post 2020, the demand is likely to rise on account of opening of all the trade routes and relative price rise.
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Growth of Natural Gas Trade is Likely to Drive the Market
- LNG or natural gas is a cleaner form of energy emitting lesser carbon particles than other petroleum products or other fossil fuels, like coal.
- With an increasing consumption rate of natural gas, on account of mounting environmental concerns in the United States, is expected to ramp up production capacities of their oil and gas fields. The United States' natural gas consumption in 2019 was about 846.6 billion cubic meters, the highest annual amount recorded.
- Technology, such as unconventional directional drilling techniques, supported the United States to increase the production volume of shale gas from basins, like Marcellus and Permian basins. Moreover, the United States planned to be a net exporter of energy by 2020, including the export of petroleum products, natural gas, coal, and coke.
- Thus, the factors mentioned above are likely to act as a driver for the growth of natural gas trade in the country. This, in turn, would increase cleaner vessel movements. Thus, it would support the bunker fuel market's growth during the forecast period.
