The profit traders can get from selling shipping fuel in Singapore, the world’s second-busiest container port, may rise 24 percent in 2011 after the worst slump in at least two years, a Bloomberg News survey showed. Sellers of 380-centistoke fuel oil, or bunkers, will receive an average $4.20 a metric ton more than what they pay for the cargoes in Singapore this year, according to the median estimate in a survey of six traders conducted Jan. 24-27. The difference, known as the bunkers premium, shrank to an average $3.40 a ton last year from $5.92 in 2009 and $12.14 in 2008, according to data compiled by Bloomberg. China’s booming economy is powering Singapore’s container traffic, fanning demand for fuel to drive ships just as supplies get squeezed by rising power-station use elsewhere in Asia. Sales of bunkers, which surged to an all-time high in 2010, may advance a further 9 percent this year, according to Poten & Partners Inc., a New York-based energy adviser and shipbroker. “If the current tightness in the market continues until the end of March, the premium could average $10 for the first three months of the year,” said Kazushi Fujisawa, a trading manager at Peninsula Petroleum in Tokyo who has worked for PetroChina Co., Itochu Corp. and Nippon Oil during his 19 years in the bunkers business. The bunkers premium rose to $21 a ton today and has averaged $10.07 this year, according to Bloomberg data. A cargo of 380-centistoke fuel oil for loading in Singapore cost $555.50, while bunkers for delivery to ships were at $576.50. Sliding Returns Traders buy fuel oil, a residue from refining crude, in the cargo market, where it’s typically exchanged in lots of 20,000 tons or more. They then store it before selling to shipowners in smaller parcels. Returns slumped last year as the number of accredited suppliers in Singapore increased. There were 80 at the end of last year, according to the Maritime and Port Authority of Singapore, compared with 75 in 2009. BP Plc, Exxon Mobil Corp. and SK Energy Co. are the nation’s biggest. “The Singapore bunkers market will remain under furious sales competition this year because of increased suppliers,” Fujisawa said. Singapore became the world’s busiest container port in 2005 after Hong Kong lost out to cheaper harbors in southern China. The city state’s economy will expand as much as 6 percent in 2011, according to government estimates, after growing an unprecedented 14.7 percent last year. Rising Demand Demand for fuel oil is rising as countries such as South Korea and China divert supplies away from Singapore to meet increased domestic energy use, according to five of the traders surveyed. Increased supplies of off-specification fuel oil from the West also boosted the bunkers premium, four of the traders said. Peak power demand in South Korea, Asia’s fourth-biggest energy-consuming nation, rose to an all-time high in January as a colder-than-average winter season boosted fuel-oil use for heating, which accounts for 4 percent of the nation’s electricity supply. Japan’s 10 regional power companies used 37 percent more fuel oil from a year earlier at thermal generators in December, according to government data. Singapore’s bunker-fuel market is benefitting as growth in China, the world’s biggest energy user, outpaces every other major economy. Gross domestic product may be 9.5 percent this year, according to the median estimate of eight analysts surveyed by Bloomberg. U.S. gross domestic product may grow 3.1 percent, while the euro region’s increases less than 1.6 percent, according to Bloomberg surveys. Lure of Singapore Shipowners are being attracted to Singapore to buy fuel because its handling and communication facilities are superior to China’s, according to Poten & Partners. The city-state accounts for about 19 percent of global fuel-oil sales. “As China’s container-ship trade continues to expand, Singapore will continue to benefit from it in bunker-fuel sales,” Poten said in a Jan. 7 report. Sales will grow to 3.7 million tons a month this year, from 3.4 million tons a month in 2010, it said. While Chinese container traffic surpassed 110 million 20- foot equivalent units last year, about four times that of Singapore, container vessels calling at the island-nation accounted for about 14 million tons of bunkers sales, compared with 18 million in China, according to the report. “The most attractive part of the Singapore market is steadiness in supplies,” said Takuki Yoshida, a bunkers trader at Hanwa Co. in the city. “Ships call at Singapore as owners know fuel supply is always guaranteed there with a good price. You can’t find ports like this in other countries. Supplies often dry up at many ports.” Shipping-fuel sales in Singapore, the world’s largest port for bunkering, rose 12 percent to 40.9 million tons last year, according to data compiled by the port authority. The sales volume rose 4.1 percent in 2009 and 11 percent in 2008. To contact the reporters on this story: Yuji Okada in Tokyo at yokada6@bloomberg.net; Yee Kai Pin in Singapore at kyee13@bloomberg.net To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net

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