Bunker demand to fall by 8pc in 2Q: IEA

Global bunker demand will fall by 8pc year on year in the second quarter as Covid-19 related lockdowns result in fewer trade movements and almost no passenger travel, according to the IEA.

The Paris-based agency forecasts demand from cruise ships will fall by 90pc, from container ships by 12pc, and from dry bulkers by 2pc. It forecasts demand from oil and chemical tankers will be broadly unchanged.

The IEA said demand from all vessel types will drop by 5pc this year, with 6pc and 3pc year-on-year falls in the third and fourth quarters.

Cruise ships account for only around 6pc of global bunker demand, but the sector was hardest hit by Covid-19 lockdowns. Three of the biggest cruise lines took their ships out of operation in March for around 30 days. This weighed on high-sulphur fuel oil (HSFO) demand in particular, as about 40-65pc of cruise ships are fitted with exhaust scrubbers.

The IEA said the cruise industry will recover marginally in the third quarter, when bunker demand from the sector will be down by around 83pc from a year earlier. The drop will be 60pc in the fourth quarter.

Demand from container ships, which burn 14pc of bunker fuels according to the IEA, will also recover in the third and fourth quarter to drops of 8pc and 4pc, respectively. Container ships have increasingly sailed with empty containers since parts of China started to lock down from late January, and the rest of the world from mid-March. Some voyages have also been cancelled, and some ports skipped.

Shipping association Bimco said 2.2mn twenty-foot equivalent unit (TEU) were idle in April, around 9pc of the global fleet. Maersk, the world's biggest bunker consumer, said its fuel consumption fell by 7.4pc on the year in the first quarter.

Demand for dry bulk ships, which make up 29pc of global bunker demand, have also been under pressure from the global economic slowdown. The IEA expects the 2pc year-on year bunker demand drop from sector to continue in the third quarter, and then recover in the fourth quarter to the same level as a year before.

The IEA expects bunker demand from oil and chemical tankers, which make up 21pc of global consumption, to be flat in the second, third and fourth quarters. Crude oil and products tanker demand rose in April, largely because of demand for floating storage and higher exports from the Middle East.

Bunker sales in Singapore, the world's biggest bunkering port, fell by 5pc in April from March.

By Erik Hoffmann